FWT, Inc. v. Haskin Wallace Mason Property Management, L.L.P. ( 2009 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-321-CV
FWT, INC. APPELLANT
V.
HASKIN WALLACE MASON APPELLEE
PROPERTY MANAGEMENT, L.L.P.
------------
FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY
------------
OPINION ON REHEARING
------------
Appellant FWT, Inc. filed a motion for rehearing and en banc
reconsideration of our opinion issued on August 27, 2009. We deny FWT’s
motion for rehearing and en banc reconsideration, withdraw our opinion and
judgment dated August 27, 2009, and substitute the following.
I. INTRODUCTION
Texas law is clear that a right of first refusal empowers its holder with a
preferential right to purchase the subject property on the same terms offered
by or to a bona fide purchaser. Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d
640, 644 (Tex. 1996). What is less clear is whether the holder of a preferential
right who desires to exercise that right can be required under certain
circumstances to purchase assets that are bundled with the subject property.
This is the primary issue at the center of a dispute between FWT and Appellee
Haskin Wallace Mason Property Management, L.L.P. (“Haskin Wallace”). We
will affirm the trial court’s orders denying FWT’s motion for summary judgment,
granting Haskin Wallace’s motion for summary judgment, and overruling FWT’s
objections and special exceptions to Haskin Wallace’s motion for summary
judgment and response.
II. U NDISPUTED F ACTUAL AND P ROCEDURAL B ACKGROUND
Greg Haskin, Russell Wallace, and Jim Mason are the owners of Haskin
Wallace. In 1990, they formed Texas Galvanizing, Inc. Texas Galvanizing is
located in Hurst and operates a “hot-dip” galvanizing plant. 1
In 1997, FWT sold to Haskin Wallace approximately six acres of
undeveloped real property (“the Property”) located in Kennedale and adjacent
to FWT’s plant. A Correction Warranty Deed (“Deed”) identifies FWT as the
1
 According to Wallace, “hot-dip galvanizing is a process of applying a
zinc coating to fabricated iron or steel materials by immersing the material in a
bath consisting of molten zinc.” Galvanizing assists in corrosion protection of
exposed steel.
2
“Grantor” and Haskin Wallace as the “Grantee”; identifies the Property as that
described in an exhibit attached to the Deed, which is a metes and bounds
description of the six acres; and includes the following right of first refusal in
favor of FWT:
(a) In the event Grantee desires to sell, lease or otherwise
convey all or any part of the Property and shall have a bona
fide offer from a third party who is ready, willing and able to
purchase the Property at a price acceptable to Grantee, then
Grantee shall furnish to Grantor written notice of the name
of the prospective purchaser and the terms and conditions of
such offer. Such notice shall be deemed to have been served
and received, when mailed in the United States mail, postage
prepaid, by certified mail, return receipt requested, addressed
to Grantor at the following address:
FWT, Inc.
P.O. Box 8597
Fort Worth, Tarrant County, Texas 76124
Grantor shall have 20 days after receipt of the notice in
which to elect to purchase, lease or otherwise accept such
conveyance, as the case may be, at the same price and
under the same terms and conditions offered by the
prospective purchaser. Such election shall be exercised by
written notice given by Grantor to Grantee. [Emphasis
added.]
Haskin, Wallace, and Mason created U.S. Galvanizing, L.P. to operate and
manage a galvanizing business to be located on the Property. A 22,500-
square-foot facility designed for “hot-dip” galvanizing was constructed on the
Property, and U.S. Galvanizing commenced operations in December 1998.
3
Haskin, Wallace, and Mason eventually decided to sell Texas Galvanizing
and U.S. Galvanizing. FWT proposed to purchase the businesses for $15.5
million, but Haskin, Wallace, and Mason ultimately reached an agreement with
Valmont Industries, Inc. for the sale of the businesses and for the lease or
purchase of the Property. By letter dated December 17, 2007, Haskin Wallace
notified FWT that Valmont had agreed to purchase the assets of both
galvanizing businesses for $16,500,000; to lease the Property from Haskin
Wallace for $25,000 per month for five years with two additional five-year
options and an option to purchase the Property for $2,500,000; and to
sublease from Haskin Wallace the property on which Texas Galvanizing was
located. Valmont did not offer to purchase the assets of the businesses
independent of the lease or purchase of the Property. According to the
December 17 letter, the purchase of one “bundle of assets is contingent upon
the purchase of another.”
In response to the notification letter, FWT sent a letter dated December
31, 2007, to Haskin Wallace stating as follows:
This letter is to advise you that FWT, Inc. hereby elects to exercise
its right of first refusal in the Deed.
Apparently under the impression that FWT desired to exercise its preferential
right and purchase the galvanizing businesses under the same terms and
4
conditions as Valmont, counsel for Haskin Wallace responded to FWT’s
December 31 letter and forwarded to FWT’s counsel a “Closing Checklist” and
a proposed closing date of January 22, 2008. The checklist identified the
“Sellers” as Texas Galvanizing, U.S. Galvanizing, Haskin, Wallace, and Mason,
and it listed the due dates and responsible party for various documents or items
relevant to the sale of Texas Galvanizing and U.S. Galvanizing.
Thereafter, by letter dated January 8, 2008, FWT notified Haskin Wallace
of the following:
By letter dated December 31, 2007, I advised you that FWT, Inc.
had elected to exercise its right of first refusal in the Deed. FWT,
Inc. is ready to consummate the closing of the exercise of the right
of first refusal in the Deed. Please advise me of the closing date.
In response to this letter, counsel for Haskin Wallace sent a letter to FWT’s
counsel stating in part that “the exercise of the Option to Purchase by a holder
of a Right of First Refusal must be positive, unconditional and unequivocal and
must be exercised in strict compliance with the terms of the option” and that
“FWT must accept all terms of the offer or the offer will be considered
rejected.” Counsel for Haskin Wallace thus proposed January 18, 2008, as a
closing date and stated that his clients would expect to receive good funds
totaling $16,500,000 for the assets of Texas Galvanizing and U.S. Galvanizing.
No closing ever occurred.
5
Haskin Wallace sued FWT shortly thereafter, seeking a declaratory
judgment that FWT’s right of first refusal was extinguished or that FWT failed
to materially comply with the right of first refusal and, therefore, waived the
right. FWT answered and sought a declaration in its amended counterclaim that
the right of first refusal contained in the Deed “pertains solely to the sale or
lease of the Property”; that FWT properly exercised its right of first refusal in
the Deed; and that FWT may lease the Property at a rate of $25,000 per month
for five years, elect to renew the lease under the same terms for two additional
five-year terms, and elect to purchase the Property for $2,500,000. FWT also
sought specific performance of its right of first refusal in the Deed and pleaded
that all conditions precedent to recovery on its claim for specific performance
had been performed or have occurred.
Haskin Wallace filed a motion for summary judgment on its declaratory
judgment action, citing two grounds: (1) FWT’s right of first refusal was
waived or extinguished because FWT failed to tender performance in conformity
with the terms and conditions of the “Transaction,” and (2) in order to
appropriately exercise the right of first refusal, FWT was required to
unequivocally accept all of the terms and conditions of the “Transaction.”
Haskin Wallace identified the “Transaction” as Valmont’s acquisition of the
assets of Texas Galvanizing and U.S. Galvanizing. FWT responded and
6
specially excepted to parts of Haskin Wallace’s motion. FWT also filed a
motion for summary judgment, asserting that summary judgment was proper
on its claim for a declaratory judgment because it properly exercised its right of
first refusal in the Deed, which related solely to the Property, and that summary
judgment was proper on its claim for specific performance. Haskin Wallace
responded, to which FWT filed special exceptions and objections. The trial
court denied FWT’s motion for summary judgment, granted Haskin Wallace’s
motion for summary judgment, and overruled FWT’s objections and special
exceptions. FWT appeals.
III. S TANDARD OF R EVIEW
In a summary judgment case, the issue on appeal is whether the movant
met the summary judgment burden by establishing that no genuine issue of
material fact exists and that the movant is entitled to judgment as a matter of
law. Tex. R. Civ. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211,
215 (Tex. 2002); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671,
678 (Tex. 1979). The burden of proof is on the movant, and all doubts about
the existence of a genuine issue of material fact are resolved against the
movant. Sw. Elec. Power Co., 73 S.W.3d at 215.
When reviewing a summary judgment, we take as true all evidence
favorable to the nonmovant, and we indulge every reasonable inference and
7
resolve any doubts in the nonmovant’s favor. Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Evidence that favors the movant’s
position will not be considered unless it is uncontroverted. Great Am. Reserve
Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965).
But we must consider whether reasonable and fair-minded jurors could differ in
their conclusions in light of all of the evidence presented. See Wal-Mart Stores,
Inc. v. Spates, 186 S.W.3d 566, 568 (Tex. 2006); City of Keller v. Wilson, 168
S.W.3d 802, 822–24 (Tex. 2005). The summary judgment will be affirmed
only if the record establishes that the movant has conclusively proved all
essential elements of the movant’s cause of action or defense as a matter of
law. Clear Creek Basin Auth., 589 S.W.2d at 678.
When both parties move for summary judgment and the trial court grants
one motion and denies the other, the reviewing court should review both
parties’ summary judgment evidence and determine all questions presented.
Valence Operating Co., 164 S.W.3d at 661. The reviewing court should render
the judgment that the trial court should have rendered. Id.
IV. C ONDITIONS P RECEDENT
In its first issue, FWT argues that Haskin Wallace’s failure to specifically
deny the occurrence of conditions precedent to specific performance bars it
from claiming that its preferential right was not triggered or that it waived the
8
preferential right. 2 FWT raises this argument for the first time on appeal.
Accordingly, the argument is waived. See Tex. R. Civ. P. 166a(c) (“Issues not
expressly presented to the trial court by written motion, answer or other
response shall not be considered on appeal as grounds for reversal.”); Tex. R.
App. P. 33.1 (requiring that as a prerequisite for presenting a complaint for
appellate review, record must show that the complaint was made to trial court
by timely request, objection, or motion). We overrule FWT’s first issue.
V. FWT’S P REFERENTIAL R IGHT
In its second issue, FWT challenges the trial court’s order denying its
motion for summary judgment on its claims for a declaratory judgment and for
specific performance. FWT contends that its preferential right requires it to
meet only the terms offered by Valmont with regard to the Property and that
it is therefore not obligated to additionally purchase the assets of the
galvanizing businesses. It relies on a number of Texas intermediate appellate
court cases that purport to support its position. FWT claims that Texas
2
 In its first amended counterclaims, FWT alleged, “FWT pleads that all
of the conditions precedent to recovery on its claim for specific performance
have been performed or have occurred.” It claims that the conditions necessary
for Haskin Wallace’s duty to convey the Property under the preferential right in
the Deed are (1) the right must be triggered and (2) FWT must exercise the
right. FWT contends that Haskin Wallace cannot argue that FWT’s preferential
right was not triggered or that FWT failed to properly exercise its preferential
right because Haskin Wallace did not specifically deny those occurrences.
9
case law “overwhelmingly” supports its position, that “every Texas case
considering whether a right of first refusal obligates its holder to purchase more
than the property subject to the right [of first refusal] has rejected [Haskin
Wallace’s] position,” and that the case law Haskin Wallace relies on is
distinguishable from the facts of this case.
Haskin Wallace argues that the language in the Deed establishing FWT’s
preferential right required FWT to match the same terms and conditions offered
by Valmont, including purchasing the assets of the galvanizing businesses,
because the terms were commercially reasonable, imposed in good faith, and
not designed to defeat FWT’s preferential right. Haskin Wallace relies
principally on a case from the Fifth Circuit Court of Appeals 3 and a number of
Texas intermediate appellate court cases applying the rule expressed in the Fifth
Circuit case. It contends that the cases relied on by FWT are distinguishable
and thus not controlling.
There is no dispute that FWT has a valid preferential right as set forth in
the Deed, that Haskin Wallace gave notice of the terms and conditions of
Valmont’s offer as required by the Deed, that FWT’s preferential right was
3
 See W. Tex. Transmission, L.P. v. Enron Corp., 907 F.2d 1554 (5th
Cir. 1990), cert. denied, 499 U.S. 906 (1991).
10
triggered, 4 or that FWT gave timely notice of its desire to exercise its
preferential right. Nor is there any dispute or contention by either party that the
language in the Deed setting forth FWT’s preferential right is ambiguous.
Rather, the dispute between FWT and Haskin Wallace only concerns whether,
in exercising its preferential right, FWT must either (a) only lease or purchase
the Property under the same terms and conditions offered by Valmont without
also purchasing the assets of Texas Galvanizing and U.S. Galvanizing or
(b) lease or purchase the Property under the same terms and conditions offered
by Valmont and also purchase the assets of Texas Galvanizing and U.S.
Galvanizing.
A. Preferential Rights in General
A preferential right, also known as a right of first refusal or preemptive
right, is a right granted to a party giving him or her the first opportunity to
purchase property if the owner decides to sell it. Mandell v. Mandell, 214
S.W.3d 682, 688 (Tex. App.—Houston [14th Dist.] 2007, no pet.); Holland v.
Fleming, 728 S.W.2d 820, 822–23 (Tex. App.—Houston [1st Dist.] 1987, writ
ref’d n.r.e.). A preferential right has been described as a dormant option.
4
 Haskin Wallace argued in its response to FWT’s motion for summary
judgment that FWT’s preferential right was not invoked, but it has abandoned
that contention in this appeal. Therefore, we do not address it.
11
Mandell, 214 S.W.3d at 688 (citing A.G.E., Inc. v. Buford, 105 S.W.3d 667,
673 (Tex. App.—Austin 2003, pet. denied)). Once the property owner conveys
the terms of the offer to the rightholder, the rightholder then has the power to
accept or reject the offer. Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d
518, 524 (Tex. App.—Amarillo 1998, pet. denied). Thus, when the property
owner gives notice of his intent to sell, the preferential right matures or “ripens”
into an enforceable option. City of Brownsville v. Golden Spread Elec. Coop.,
Inc., 192 S.W.3d 876, 880 (Tex. App.—Dallas 2006, pet. denied).
The terms of the option are formed by both the provisions granting the
preferential right and the terms and conditions of the third-party offer presented
to the rightholder. Id.; Abraham Inv. Co., 968 S.W.2d at 524–25. Once the
property owner has given the rightholder notice of his intent to sell on the terms
contained in the third-party offer, the terms of the option cannot be changed
for as long as the option is binding on the property owner. Golden Spread Elec.
Coop., 192 S.W.3d at 880.
The rightholder’s exercise of the option to purchase must be positive,
unconditional, and unequivocal. Id.; Tex. State Optical, Inc. v. Wiggins, 882
S.W.2d 8, 10–11 (Tex. App.—Houston [1st Dist.] 1994, no writ). With regard
to an option, generally, a purported acceptance containing a new demand,
proposal, condition, or modification of the terms of the offer is not an
12
acceptance but a rejection. Golden Spread Elec. Coop., 192 S.W.3d at 880;
Tex. State Optical, 882 S.W.2d at 11. When the rightholder gives notice of his
acceptance of the offer, a contract between the rightholder and the property
owner is created. Golden Spread Elec. Coop., 192 S.W.3d at 880.
B. Contract Construction
Our primary concern when construing a written contract is to ascertain
the true intentions of the parties as expressed in the instrument. Coker v.
Coker, 650 S.W.2d 391, 393 (Tex. 1983). We examine and consider the entire
writing in an effort to harmonize and give effect to all provisions of the contract
so that none will be rendered meaningless. Id. We presume that the parties to
the contract intend every clause to have some effect. Heritage Res., Inc. v.
NationsBank, 939 S.W.2d 118, 121 (Tex. 1996); XCO Prod. Co. v. Jamison,
194 S.W.3d 622, 627 (Tex. App.—Houston [14th Dist.] 2006, pet. denied).
We give terms their plain, ordinary, and generally accepted meaning unless the
contract shows that the parties used them in a technical or different sense.
Heritage Res., 939 S.W.2d at 121.
13
C. FWT’s Case Law
FWT relies on five Texas cases to support its argument that it is not
obligated to purchase the assets of the galvanizing businesses. We examine
each case.5
1. Hinds v. Madison 6
The Madisons owned a 14,818.63-acre tract of land. Hinds, 424 S.W.2d
at 62. Out of that tract, they leased to Hinds 2,849.28 acres for a term of five
years, beginning October 1, 1962, and ending October 1, 1967. Id. The
leased tract was separated from the rest of the acreage by the Devil’s River.
Id. The lease provided that it was subject to the Madisons’ right to sell the
leased premises, and it gave the Madisons the right to terminate the lease on
October 1 of any year by giving to Hinds six months’ prior written notice of the
sale. Id. The lease contained a preferential right in favor of Hinds, stating in
part that “in the event of sale, lessee shall have a preference right to purchase
the leased premises for such price and upon the same terms and conditions
otherwise for which lessors are willing to sell to others.” Id. In December
5
 FWT additionally directs us to out-of-state case law purporting to
support its argument. Like the Texas case law discussed herein, the out-of-
state case law is split on the issue we consider. See, e.g., Chapman v. Mutual
Life Ins. Co. of N.Y., 800 P.2d 1147, 1151–52 (Wyo. 1990); Crow-Spieker No.
23 v. Robert L. Helms Constr. & Dev. Co., 731 P.2d 348, 350 (Nev. 1987).
6
 424 S.W.2d 61 (Tex. Civ. App.—San Antonio 1967, writ ref’d n.r.e.).
14
1966, the Madisons entered into a contract with a third party for the sale of the
entire 14,818-acre tract. Id. The sale, however, was never consummated.
Hinds sued seeking a declaration of when he could exercise the preferential
right contained in the lease. Id. The trial court denied Hinds all relief. Id.
On appeal, after analyzing a number of other points of error, the court
considered Hinds’s argument that, according to the testimony at trial, he had
a preferential right to purchase the entire 14,818-acre tract for the same price
and under the same terms and conditions provided in the contract of sale
between the Madisons and the third party. Id. at 64. FWT directs our attention
to the Hinds court’s lone statement addressing this argument in which the court
reasoned that it did not see “how in any way lessee’s option or preference right
to purchase a portion of the property sought to be sold can be enlarged to
cover other lands owned by lessors, or can in any manner cover anything
except the property actually subject to the option.” Id. The court cited the
holding of one out-of-state case to support its conclusion. See Atl. Ref. Co. v.
Wyo. Nat’l Bank of Wilkes-Barre, 51 A.2d 719, 722–24 (Pa. 1947) (holding
that a lease of a portion of a parcel of land giving the lessee a preferential right
to purchase the demised premises on the same terms of an offer by a third
person does not give the lessee a right to purchase the whole parcel).
15
Hinds is the first Texas case that we have located relevant to the specific
issue addressed here. There are a couple of observations worth pointing out.
Hinds argued in points of error two through eight that the trial court had erred
by not declaring that he had a preferential right to purchase only the leased
premises for a price proportionate to what the Madisons had contracted to sell
the entire tract of land for. Hinds, 424 S.W.2d at 63. Notwithstanding the
money, this argument is somewhat similar to FWT’s position in this case. The
Hinds court, however, noted that there was “no evidence that lessors desired
to or would sell the 2,849-acre tract alone, without selling the whole tract.”
Id. at 63 (emphasis added). This portion of the opinion appears to support
Haskin Wallace’s position in this case. After concluding that Hinds was not
entitled to purchase only the leased tract of land for a particular sum of money,
the court went on to state, as set out above, that Hinds could not purchase the
entire 14,818-acre tract of land. The court’s reasoning seems to be
contradictory to a certain extent, but the portion of the opinion relied on by
FWT provides support for its position that the holder of a preferential right
cannot be compelled to purchase assets beyond the scope of the agreement
subject to the preferential right in order to exercise that right.
16
2. Riley v. Campeau Homes (Tex.), Inc. 7
The Rileys were assigned a lease for condominium unit 1801 at the Bayou
Bend Towers from BTI, Ltd., who had leased the premises from Centeq
Condominium, Ltd., who later conveyed the property to Campeau. Riley, 808
S.W.2d at 185. The Rileys’ lease included a preferential right providing that the
tenant would have the right to purchase the property if the landlord received a
bona fide offer to purchase in whole or in part the leased premises. Id. at 186.
Campeau entered into a sales contract with Advocate Equities (U.S.) Inc.,
Trustee for the sale of the Bayou Bend Towers, including unit 1801, and the
Rileys notified Campeau that they desired to exercise their preferential right to
purchase their condominium unit. Id. at 185. Campeau subsequently advised
the Rileys that their unit was part of a larger sale of numerous properties and
that it had no intention to sell it other than as part of the entire transaction with
Advocate. Id. The Rileys demanded that their preferential right to purchase the
unit be honored, but Campeau refused the demand, “asserting that [the Rileys’]
right of first refusal was not applicable to this sale because it was a ‘bulk’ sale
involving other properties.” Id. The Rileys sued, and the trial court granted
Campeau’s motion for partial summary judgment. Id. at 186.
7
 808 S.W.2d 184 (Tex. App.—Houston [14th Dist.] 1991, writ
dism’d).
17
On appeal, the court identified the specific issue to be resolved at the
outset of the opinion, stating as follows: “The material issue in this case is
whether a lessee’s right of first refusal on a leased condominium is triggered
when the owner decides to sell that condominium as part of a package with
other condominium units.” Id. at 185. The court held that the Rileys’
preferential right to purchase unit 1801 was triggered even though the single
unit was included as part of a “package” deal to purchase all of the Bayou Bend
Towers units. Id. at 189.
Riley is distinguishable from this case because the issue there—whether
the preferential right was triggered—is not at issue in this case; it is undisputed
that the December 17, 2007 notification letter triggered FWT’s preferential
right. 8 Riley is also distinguishable from this case because Campeau ultimately
withdrew the Rileys’ condominium unit from the sale of the remaining
condominium units. Id. at 186. As Haskin Wallace points out, in this case, the
terms and conditions of Valmont’s offer contemplate an “all or nothing”
proposal. Because Riley did not present the specific issue that we are
confronted with in this case, it is inapposite.
8
 The court in McMillan v. Dooley, 144 S.W.3d 159, 181 (Tex.
App.—Eastland 2004, pet. denied), even stated of Riley, “The material issue in
the case was whether or not the preferential purchase right was triggered by
the package conveyance.”
18
3. Comeaux v. Suderman 9
Comeaux leased from the Sudermans slightly less than one acre of land
on the Bolivar Peninsula in Galveston County. Comeaux, 93 S.W.3d at 217.
The lease included a preferential right in favor of Comeaux providing that in the
event the Sudermans received a proposal to sell the leased premises, the sale
was subject to Comeaux’s preferential right to purchase the property on the
same terms and conditions as those offered by the prospective purchaser. Id.
The Sudermans subsequently notified Comeaux in writing of a pending
$350,000 cash offer for the leased premises and some adjoining property to the
east and west of the leased premises. Id. The notice did not specify that the
total acreage to be sold was thirty-five acres. Id. Comeaux, however,
apparently assumed that the sale involved only twenty-two acres surrounding
his property. Id. at 218. He told the Sudermans’ real estate agent that he
could not afford the $350,000 payment, and he continued making payments
to the new owners of the land, the Meiers, after the sale was consummated.
Id. Although Comeaux abandoned the leased premises when a storm destroyed
his fishing pier, he later sued the Sudermans and the Meiers, asserting that he
was entitled to specific performance or damages because the Sudermans had
failed to comply with the terms of the preferential right contained in the lease
9
 93 S.W.3d 215 (Tex. App.—Houston [14th Dist.] 2002, no pet.).
19
agreement. Id. The trial court granted summary judgment in favor of the
Sudermans. Id.
On appeal, Comeaux argued that his preferential right was never triggered
because the written notice he received had failed to offer him the opportunity
to purchase only the leased premises (rather than the entire thirty-five-acre
parcel) and because the notice did not contain all the relevant terms and
conditions of the sale. Id. at 219, 221. The court disagreed and held that
Comeaux’s option had expired because he received actual notice of the
proposed sale of the leased premises and an opportunity to purchase it, which
he declined. Id. at 221–23. The court stated that “because Comeaux received
notice and was given the opportunity to exercise his right of first refusal,
technical deficiencies in the notice—or even no notice—cannot revive the right
he declined.” Id. at 222. FWT does not rely on this, the holding of the case.
Instead, it directs our attention to footnote three, in which the court addressed
the appellees’ argument that they were not required to give any notice to
Comeaux because the sale was for more than the leased premises. Id. at 221
n.3. The court acknowledged that it was “unnecessary to the disposition of
[the] case” to address this issue, but it cited Riley and stated, “A seller who has
given a holder a preemptive right cannot defeat that right by selling the subject
matter of that right as part of a larger transaction.” Id.
20
Comeaux is distinguishable from this case because the issues
there—whether the preferential right was triggered and whether Comeaux made
any effort to exercise his option following his receipt of the notice of the
proposed sale—are not relevant to the issue in this case. 10 The court also
expressly noted that its statement in footnote three was unnecessary to the
disposition of the case. Id. The dicta statement therefore does not support
FWT’s position. Because Comeaux did not consider the specific issue that we
are confronted with in this case, it is inapposite. 11
4. McMillan v. Dooley
McDonald or an entity under his control owned and operated three leases
from the mid-1970s until January 1998. McMillan, 144 S.W.3d at 165. The
assignments by which McDonald acquired the properties were subject to
farmout agreements that contained preferential rights in favor of the assignors.
Id. at 164–65. In 1997, McMillan expressed interest in purchasing the Dooley
Lease, one of the three leases. Id. at 165. McDonald advised McMillan that
10
 The McMillan court observed of Comeaux, “The holding in Comeaux
establishes that a sufficient presentment to the rightholder occurs even though
the offer includes property not covered by the preferential purchase right in the
offer presented to the rightholder.” McMillan, 144 S.W.3d at 178.
11
 Indeed, in response to one of Comeaux’s arguments, the court stated
that it did not have to “address whether Comeaux should have been offered the
opportunity to purchase only the leased premises.” 93 S.W.3d at 221.
21
he was interested only in selling all of the leases as a package rather than just
selling the Dooley Lease by itself. Id. McDonald thereafter conveyed all of the
leases to McMillan without advising the preferential rightholders of McMillan’s
offer. Id. at 166. Dooley later informed McMillan of Dooley’s preferential right
as to the Dooley Lease, and McMillan offered to sell all of the leases to Dooley,
not just the Dooley Lease. Id. But Dooley declined the offer because he was
interested in purchasing only the Dooley Lease. Id. at 167. Dooley and the
other preferential rightholders eventually sued McMillan after further
correspondence. Id. at 166–68. The trial court determined that the preferential
right provisions had been breached, and it granted Dooley’s request for specific
performance, awarding him title to the Dooley Lease. Id. at 169.
On appeal, the court considered many issues, including whether McMillan
had adequately provided (or “presented”) Dooley with an opportunity to
exercise his preferential right, whether Dooley was required to accept the other
leases in order to exercise his preferential right, and whether Dooley’s
preferential right expired when he declined McMillan’s offer without taking any
further action. Id. at 176–81. In regard to whether Dooley was required to
accept the other leases in order to exercise his preferential right, the issue most
relevant to the issue in this case, the court acknowledged that “[o]nly a few
Texas cases have addressed the enforcement of preferential purchase rights in
22
a package conveyance,” and it discussed only Hinds and agreed with its
reasoning. Id. at 179. The court stated,
Assuming the defendants had only offered Dooley the opportunity
to purchase the Dooley Lease, the court’s holding in Hinds would
have prevented him from seeking to exercise his preferential
purchase right against the other leases in the conveyance. If a
rightholder is not permitted to expand his preferential purchase
right to include property not covered by the provision, it would be
improper for him to be required to accept other property not
covered by his preferential right in order to exercise his right.
Id.12
There are a number of ways in which the facts of McMillan are
distinguishable from this case. Most notably, the package deal that McMillan
offered Dooley consisted of three unrelated leases. In this case, the business
assets and property that FWT has been offered to purchase are significantly
related; Haskin, Wallace, and Mason formed and own both Texas Galvanizing
and U.S. Galvanizing, and U.S. Galvanizing sits directly on top of the Property.
Moreover, in McMillan, there were two other rightholders making claims with
regard to the other two leases that McDonald included in his offer to Dooley.
In this case, there are no other competing rightholders, persons, or entities.
12
 The court also distinguished West Texas Transmission, but it did so
in the context of considering “whether or not the defendants made a sufficient
presentment to Dooley,” which is not at issue in this case. Id. at 176.
23
5. Navasota Res., L.P. v. First Source Tex., Inc. 13
Navasota had a joint operating agreement with First Source applicable to
certain oil and gas interests in an area near the Navasota River. Navasota, 249
S.W.3d at 529. The parties referred to the property as the “Hilltop Prospect.”
Id. Navasota owned an undivided fifty-five percent working interest, and First
Source owned an undivided forty-five percent working interest. Id. The
agreement also contained a preferential right provision requiring that notice be
given to the other party should a party desire to sell all or any part of its interest
under the agreement and providing that the party would have ten days to
purchase the interest under the same terms and conditions offered by the
seller. Id.
Gastar, the parent company of First Source, signed a letter of intent with
Chesapeake in which (a) Chesapeake would purchase 19.9 percent of Gastar’s
outstanding stock, (b) Chesapeake would purchase 33.33 percent of First
Source’s working interest in the Hilltop Prospect, and (c) Chesapeake and
Gastar would enter an area of mutual interest comprising thirteen counties in
East Texas. Id. at 530. First Source notified Navasota of the deal with
Chesapeake and informed Navasota that if it elected to exercise its preferential
right, it would be obligated to pay Gastar for one-third of its leasehold acreage
13
 249 S.W.3d 526 (Tex. App.—Waco 2008, pet. denied).
24
in the Hilltop Interest and a percentage of drilling costs. Id. This notice did not
require Navasota to purchase Gastar’s stock or enter into the multi-county area
of interest. Navasota timely notified First Source of its intent to exercise its
preferential right, but First Source sent a second notice letter explaining that
Navasota had to comply with every aspect of the agreement with Chesapeake,
including additionally purchasing the stock and entering into the thirteen-county
area of mutual interest. Id. at 531. Navasota refused to accept the modified
offer, Gastar claimed that it had the right to rescind the initial “ambiguous
notice,” Gastar refused to close the deal with Navasota, and Gastar and
Chesapeake closed their agreement. Id. Navasota sued, and the trial court
granted Gastar’s and Chesapeake’s motions for summary judgment. Id. at
531–32.
Among numerous other issues addressed on appeal, the court considered
whether First Source could require Navasota to purchase the shares of Gastar
stock and to enter into the thirteen-county area of mutual interest. Id. at
535–37. The court stated, “Virtually every authority of which we are aware
agrees that the holder of a preferential right cannot be compelled to purchase
assets beyond those included within the scope of the agreement subject to the
preferential right in order to exercise that right.” Id. at 535. In support of this
statement, it cited McMillan, Comeaux, and Hinds. Id. The court distinguished
25
West Texas Transmission and a few cases cited therein and held that First
Source could not require Navasota to purchase the shares of Gastar stock or
enter the thirteen-county area of mutual interest. Id. at 536–37.
Navasota, like McMillan, arrived at its holding on this issue by relying on
Hinds. Also, like in McMillan, the assets that First Source demanded that
Navasota additionally acquire were unrelated to the asset the subject of the
joint operating agreement and preferential right. Id. at 530. Further, the court
did not indicate that West Texas Transmission was entirely inapplicable or
irrelevant to the issue; the court merely distinguished it.
D. Haskin Wallace’s Case Law
Haskin Wallace relies on West Texas Transmission and a few Texas cases
to support its argument that FWT must purchase the assets of the galvanizing
businesses in addition to leasing or purchasing the Property. As we did with
the authorities relied on by FWT, we examine each case.
1. West Texas Transmission
Valero, the predecessor of West Texas Transmission, L.P., had a
preferential right to repurchase its interest in a pipeline if Enron decided to sell
its interest in the line. W. Tex. Transmission, 907 F.2d at 1556. Enron
thereafter negotiated a deal to sell all of its stock in NorTex, an affiliate,
including its interest in the pipeline, to TECO Pipeline Company. Id. at 1557.
26
The agreement expressly conditioned consummation of the sale on the approval
of the Federal Trade Commission. Id. Valero chose to exercise its preferential
right to repurchase Enron’s pipeline interest, but it declined to agree to the
condition that the FTC approve the purchase. Id. at 1558. The FTC ultimately
disapproved of Enron’s sale to Valero and ratified the sale to TECO. Id. at
1559–60. Valero sued and obtained a temporary injunction, but the trial court
rendered judgment in favor of Enron. Id. at 1561.
On appeal, the court stated that the agreement between Enron and Valero
“explicitly allows Valero to reacquire the pipeline ‘on the same terms and
conditions as set forth in [a third-party] offer or agreement to purchase.’” Id.
at 1562–63. The court reasoned that under that language, “[T]he terms and
conditions governing Valero’s repurchase remain indeterminate until Enron
receives an acceptable offer from a third party.” Id. at 1563. The court
explained that under language similar to that used in the agreement between
Enron and Valero, “[T]he owner of property subject to a right of first refusal
remains master of the conditions under which he will relinquish his interest, as
long as those conditions are commercially reasonable, imposed in good faith,
and not specifically designed to defeat the preemptive rights.” Id.
Consequently, “where the owner meets these three standards, the holder of the
right of first refusal lacks grounds to remove the specific conditions from the
27
contract, or to extract other concessions as part of the agreement.” Id. The
court held that Valero had to satisfy the condition of FTC approval because it
was commercially reasonable, imposed in good faith, and not specifically
designed to defeat Valero’s preferential right. 14 Id. at 1567–68.
As the court in Navasota recognized, West Texas Transmission involved
the conveyance of a single asset instead of multiple assets. Navasota, 249
S.W.3d at 536. However, we do not believe that this renders the case
inapplicable to ours. The issue addressed by the court in West Texas
Transmission concerned whether the holder of a preferential right must accept
additional conditions included in a third party’s offer. That is the same issue we
consider in this appeal. The condition in West Texas Transmission was FTC
approval; the condition in this case is the acquisition of business assets.
2. Texas State Optical
Texas State Optical had an agreement with Dr. Kernek in which Dr.
Kernek purchased a retail store for the sale of eyewear and, among other
things, a professional optometry practice. Tex. State Optical, 882 S.W.2d at
9. Texas State Optical retained a preferential right to purchase Dr. Kernek’s
14
 The court acknowledged that “[a] different situation would exist if
Valero had received an option to purchase the pipeline under terms and
conditions specified in the” agreement setting forth the preferential right. Id.
at 1568.
28
businesses if Dr. Kernek received an offer from a third party to purchase the
businesses. Id. After Dr. Kernek’s death, his wife entered into a stock sale
agreement for Wiggins to purchase the stock of the businesses, and Texas
State Optical notified her that it desired to exercise its preferential right to
purchase the businesses. Id. at 10. Texas State Optical, however, reserved
the right to dispute whether certain clauses of the agreement between Mrs.
Kernek and Wiggins were commercially reasonable, imposed in good faith, and
designed to defeat its preferential right. Id. These clauses included a provision
giving a buyer’s commission to Wiggins and a provision giving one-year
employment contracts to certain employees. Id. Texas State Optical and
Wiggins both filed declaratory judgments to determine the parties’ obligations
with respect to the disputed conditions of the sale, and Wiggins prevailed. Id.
On appeal, the court reasoned that with regard to the exercise of an
option, the general rule is that the acceptance must be unequivocal; a purported
acceptance containing a new demand is a rejection. Id. at 10–11. The court
recognized, however, that it is an exception to the general rule if a seller
imposes a term in bad faith to defeat the option. Id. at 11. It discussed the
West Texas Transmission case and held that the trial court had abused its
discretion because it did not “reach the issue of whether the disputed clauses
were commercially unreasonable, or were included in bad faith to defeat [Texas
29
State Optical’s] right of first refusal.” Id. Significantly, the court stated, “We
agree with the Fifth Circuit’s conclusions in West Texas Transmission.” 15 Id.
at 11.
3. Shell v. Austin Rehearsal Complex, Inc. 16
Austin Rehearsal Complex (“ARC”) leased space in a building that
ultimately came into the ownership of the Shells. Shell, 1998 WL 476728, at
*1. The governing agreement contained a preferential right in favor of ARC
requiring the Shells to notify ARC of a bona fide offer to lease other space in
the same building in which ARC leased space and giving ARC the right to lease
the property. Id. at *1 n.1. After the Shells sent ARC notice regarding a space
for lease, ARC claimed that the Shells refused to lease the space to them after
it had exercised its preferential right. Id. at *2. The Shells contended that ARC
did not effectively exercise its option because its acceptance of the notice was
conditional; ARC reserved the right to have a court determine the legality of the
“Permitted Use” and “Terms and Conditions” of the offer. Id. at *2, 9. ARC
sued, and a jury returned a verdict in its favor. Id.
15
 On rehearing, one justice filed a dissenting opinion contending that
West Texas Transmission should not be followed. Id. at 12 (Cohen, J.,
dissenting).
16
 No. 03-97-00411-CV, 1998 WL 476728 (Tex. App.—Austin Aug.
13, 1998, no pet.) (not designated for publication).
30
On appeal, the Shells challenged the sufficiency of the evidence to
support the jury’s affirmative answer to jury question number one: “Do you
find that each of the terms or conditions of the [notice of offer] (a) were
imposed in bad faith, or (b) were not commercially reasonable, or (c) were
reasonably designed to defeat ARC’s right of first refusal?” Id. at *7. The
court detailed the same option rules addressed in Texas State Optical and cited
the exception set out in West Texas Transmission. Id. at *9. The court stated,
The Shells assert that we should not adopt this exception to the
general rule because the Fifth Circuit [in West Texas Transmission]
and Houston Court of Appeals [in Texas State Optical] did not
follow Texas law but rather created new law. We disagree. Texas
courts have long recognized that the failure of the optionee to
strictly comply with the terms or conditions of the option contract
may be excused when such failure is brought about by the conduct
of the optionor. We believe the exception stated in Texas State
Optical is reasonable and applicable to the present case.
Id. (citations omitted). The court thus applied West Texas Transmission, and
it held that the evidence was sufficient to support the jury’s answer to question
number one. Id. at *10.
E. The Clear and Unambiguous Language of the Deed is Dispositive
Our review of the case law leads us to conclude that, as a general rule,
the holder of a preferential right cannot be compelled to purchase assets
beyond the scope of the agreement subject to the preferential right in order to
exercise that right. See Navasota, 249 S.W.3d at 535; Hinds, 424 S.W.2d at
31
64. An exception to this rule exists, however, when the preferential right is
expressly made subject to the same terms and conditions offered by a
prospective, bona fide, third-party purchaser, as is the case here. In such a
case, the question of whether the holder of a preferential right must purchase
the additional assets turns on whether the condition that requires the purchase
of additional assets is commercially reasonable, imposed in good faith, and not
specifically designed to defeat the preferential right. 17 See W. Tex.
Transmission, 907 F.2d at 1563. While this exception has been applied to
cases involving the conveyance of a single asset, we have not been shown any
reason why it should not apply equally to cases involving multiple assets.
In this case, FWT elected to exercise its preferential right contained in the
Deed. The Deed’s preferential right provision clearly and unambiguously
requires that FWT meet the same price and the “same terms and conditions
17
 A factor to consider in determining commercial reasonableness is
whether the assets as a whole are related. In Navasota, the bundled assets—
a percentage of Gastar’s outstanding stock and entry into an area of mutual
interest comprising numerous counties in East Texas—were, at best, minimally
related and severable from the asset the subject of the preferential right—a
working interest in an area of land. 249 S.W.3d at 530. In McMillan, the
bundle of assets that McMillan offered Dooley consisted of three separate
leases. 144 S.W.3d at 166–67. In contrast, in this case, both U.S.
Galvanizing and Texas Galvanizing are galvanizing businesses; both were
created and are owned by Haskin, Wallace, and Mason; and U.S. Galvanizing’s
22,500-square-foot facility, which is specifically designed for galvanizing, sits
directly on the Property.
32
offered by the prospective purchaser,” Valmont. Valmont expressly conditioned
its purchase or lease of the Property on its acquisition of the assets of the
galvanizing businesses; the December 17 notification letter provided to FWT
states in part, “The Transaction, as contemplated by the parties, is contingent
in nature and the relevant components are not mutually exclusive, meaning that
the purchase of one bundle of assets is contingent upon the purchase of
another, and all are contingent on the whole.” Thus, FWT was required to
meet the terms and conditions of Valmont’s offer, including the conditions
requiring acquisition of the business assets, unless those conditions were not
commercially reasonable, were imposed in bad faith, or were specifically
designed to defeat FWT’s preferential right. See id.
Haskin Wallace’s summary judgment evidence included the December 17
notification letter. The letter reveals that FWT itself at one point in time
contemplated “an acquisition of all or a majority of the assets that now
comprise the Transaction.” 18 Also, in negotiating the details of the transaction,
Valmont and Haskin Wallace proceeded (for over four months) under the
impression that FWT’s waiver of its preferential right was a “foregone
conclusion.” Thus, FWT’s possible exercise of its preferential right likely played
18
 Indeed, the record reflects that FWT offered $15.5 million for the
galvanizing businesses and Property.
33
little or no part at all in Valmont’s decision to condition its purchase or lease of
the Property on its acquisition of the assets of the galvanizing businesses. This
is supported by examining the values attributed to the major parts of the
transaction. The December 17 letter identifies the total value of the transaction
as $19,000,000, which includes a purchase price of $12,606,000 for the
assets of U.S. Galvanizing, a purchase price of $3,894,000 for Texas
Galvanizing’s assets, and a purchase price of $2,500,000 for the option on the
Property. A large percentage of the total value of the transaction accordingly
consists of the purchase price for the assets of U.S. Galvanizing and Texas
Galvanizing, not the Property. Because the value of the option to purchase the
Property is but a minor part of the overall value of the transaction
(approximately 7.6%), it indisputably would have been both commercially and
financially unreasonable for Valmont to condition its purchase or lease of the
Property on its acquisition of the assets of the galvanizing businesses simply to
frustrate FWT’s preferential right in the Property. We hold that Haskin Wallace
met its summary judgment burden to show that Valmont’s conditioning its
purchase or lease of the Property on its acquisition of the assets of the
galvanizing businesses was commercially reasonable, imposed in good faith,
and not specifically designed to defeat FWT’s preferential right.
34
FWT makes no argument and points to no evidence that the parts of
Valmont’s offer conditioning its lease or purchase of the Property on its
acquisition of the galvanizing business assets were commercially unreasonable,
were imposed in bad faith, or were designed to defeat FWT’s preferential right.
FWT argues on rehearing that this court has “re-written the parties’
agreement for them.” We disagree. FWT accepted the risk that it is now
confronted with in this case because it agreed to language in the Deed allowing
a third party to dictate the terms and conditions under which it would purchase
or lease the Property. The parties’ intent as expressed in the Deed would be
circumvented if FWT is not required to purchase the bundled assets.
FWT was not entitled to judgment as a matter of law on its claims for a
declaratory judgment and for specific performance. Haskin Wallace was
entitled to judgment as a matter of law on its declaratory judgment action. We
overrule FWT’s second issue.
VI. FWT’S O BJECTIONS AND S PECIAL E XCEPTIONS
In its third issue, FWT argues that the trial court abused its discretion by
overruling its objections and special exceptions to Haskin Wallace’s summary
judgment motion and response. FWT complains about a number of statements
in Haskin Wallace’s motion and response that allegedly attempt to explain the
intent of the parties in negotiating and signing the Deed. FWT also complains
35
of statements that FWT was willing to waive its preferential right at various
times before the December 17, 2007 notice triggered its right.
None of the complained-of statements are included in or are part of our
analysis of the issues brought by FWT in this appeal, as demonstrated above.
Thus, the trial court could have denied FWT’s motion for summary judgment
and granted Haskin Wallace’s motion for summary judgment without
considering the challenged statements or evidence. We overrule FWT’s third
issue.
VII. C ONCLUSION
Having overruled FWT’s issues, we affirm the trial court’s judgment.
BILL MEIER
JUSTICE
PANEL: CAYCE, C.J.; MCCOY and MEIER, JJ.
DELIVERED: November 25, 2009
36