Travis Woods II, Ltd. v. Mortgage Makers, Inc.

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN



NO. 03-98-00204-CV



Travis Woods II, Ltd., Appellant

v.

Mortgage Makers, Inc., Appellee



FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY NO. 236,307, HONORABLE ORLINDA L. NARANJO, JUDGE PRESIDING

Travis Woods II, Ltd. appeals a take-nothing judgment in favor of Mortgage Makers, Inc. We will affirm.

THE DISPUTE

Mortgage Makers, Inc. leased commercial office space from Travis Woods II, Ltd., beginning in June 1994. Mortgage Makers vacated the space in April 1997, with approximately two and one-half months remaining on the term of the lease, because of problems with the roof which allowed water to leak into their space when it rained. According to Mortgage Makers' president, Richard Schwarz, the leaks began with the first rain after Mortgage Makers began leasing the space and continued throughout the time of its occupancy. Water leaked through the ceiling and ran down the walls, which caused damage to carpeting, ceilings, walls and some of Mortgage Makers' equipment. With each rain and the resulting leakage, Mortgage Makers notified Kucera Management Company, the property manager. Travis Woods did not dispute that the roof leaked, but rather argued that there were no implied warranties in the lease. Further, it contended that the lease did not obligate them to repair the roof, rather only to diligently and in good faith attempt to repair the roof. Travis Woods argued that nothing excused Mortgage Makers' obligation to pay rent.

Travis Woods sued Mortgage Makers for the unpaid rent, late charges, pass-through expenses, pre- and post-judgment interest, costs and attorney's fees. After a bench trial, the court signed a take-nothing judgment in favor of Mortgage Makers. In support of its judgment, the trial court found: 1) the defect was not the result of any fault of Mortgage Makers; 2) the water leaks interrupted and interfered with Mortgage Makers' peaceful use and enjoyment of the premises; 3) the problem was never completely corrected during Mortgage Makers' lease; and 4) that Mortgage Makers was unable to use the space for the intended purposes due to acts and omissions of Travis Woods which rendered the premises unsuitable for their intended use. ⁽¹⁾ The trial court concluded that Travis Woods breached the implied warranty of suitability and signed a take-nothing judgment in favor of Mortgage Makers from which Travis Woods appeals.

DISCUSSION

Both parties argue that this case is determined by the application of the implied warranty of suitability in a commercial lease. ⁽²⁾ The implied warranty provides that the landlord in a commercial lease warrants that the premises are suitable for their intended commercial purpose. Davidow v. Inwood N. Professional Group-Phase I, 747 S.W.2d 373, 377 (Tex. 1988). This implied warranty 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 purposes and these essential facilities will remain in a suitable condition. Id. Because we conclude that the express terms of the lease determine the obligation to repair the roof, we do not reach the issue of the implied warranty or whether it was waived.

Because neither party contends the lease is ambiguous, its interpretation is a question of law to be decided by the court. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); MJR Corp. v. B & B Vending Co., 760 S.W.2d 4, 10 (Tex. App.--Dallas 1988, writ denied); Myers v. Ginsberg, 735 S.W.2d 600, 602 (Tex. App.--Dallas 1987, no writ). A lease will be given a reasonable construction that will carry out the parties' intentions, and in case of any doubt as to their intentions, the lease will be construed most strongly against the lessor. Myers, 735 S.W.2d at 603. Construction of a lease that is unreasonable or unequal should be avoided, and that construction which is obviously the most just will be favored. Id. When construing a particular paragraph in a lease, the entire lease must be considered. Id.

The lease provides that Travis Woods "shall repair and/or replace, as needed, the following items as a building expense under paragraph 32.1, . . ." ⁽³⁾ Paragraph 32.1 requires Mortgage Makers to pay, in addition to rent, its pro rata share of the "building operating expenses" contained in Exhibit C to the lease. ⁽⁴⁾ The lease defined "building operating expense" as including "roof repairs . . . and other maintenance expenses." Because Travis Woods charged Mortgage Makers a monthly fee which has been specifically set aside to pay for such expenses as roof repairs, and because the lease does not obligate Mortgage Makers to perform roof repairs, ⁽⁵⁾ we conclude that the phrase, "lessor shall repair and/or replace . . . as a building expense under 32.1," obligates Travis Woods to maintain the items defined as "business operating expenses." Moreover, if the "repair and replace" language in paragraph 8.1 refers only to those items listed in paragraph 8.1, the items listed in Exhibit C would not be the obligation of either lessee or lessor. Such interpretation is not reasonable since many of the "building operating expense" items are fundamental to the operation of a building, which would be the responsibility of the owner unless expressly made the obligation of the tenants. The lease in this case does not charge the tenants with the responsibility for the building's operation.

Having determined that the express terms of the lease obligate Travis Woods to repair the roof, we must now determine whether the failure to adequately repair the roof excuses Mortgage Makers' obligation to pay rent, thereby terminating the lease. As provided in paragraph 18.1, ⁽⁶⁾

a default by lessor for more than seven days after lessee's written demand allows lessor to terminate the lease. According to the evidence, the roof leaked and water entered Mortgage Makers' space each time it rained from the inception of the lease in June 1994 until it vacated in April 1997. Mortgage Makers' president testified that water ran down the walls, saturated the carpet, and that a portion of the ceiling, damaged by the water leaks, fell in the lap of a Mortgage Makers client. In addition, Mortgage Makers' employees had to vacate portions of the office when it rained because the water prevented use of parts of the office. Mortgage Makers called Travis Woods "every time" there was a problem, and gave written notice on August 29, 1996. Travis Woods contended that it attempted to repair the roof after receiving complaints from Mortgage Makers; however, despite Travis Woods' alleged efforts, Mortgage Makers continued to have leakage problems. Because the roof leaked for almost three years, causing damage and interruption of Mortgage Makers' use of the space, we conclude that Travis Woods did not satisfy its obligation to diligently proceed in good faith to cure the problem. Accordingly, pursuant to paragraph 18.1 of the lease, Mortgage Makers was entitled to terminate the lease. We overrule Travis Woods' issue.

CONCLUSION

Having overruled Travis Woods' issue, we affirm the trial-court judgment.

Lee Yeakel, Justice

Before Chief Justice Aboussie, Justices Jones and Yeakel

Affirmed

Filed: August 12, 1999

Do Not Publish

1. Travis Woods did not challenge the trial court's findings of fact. Generally, unchallenged findings of fact are binding on appeal. See Burrows v. Miller, 797 S.W.2d 358, 360 (Tex. App.--Tyler 1990, no writ). When accompanied by a statement of facts, findings of fact will be sustained on appeal if any evidence supports them. Id. at 361; 4 Texas Civil Practice § 20.14, at 27 (Diane M. Allen et al. eds., 1992 ed.).

2. The lease provides that "[l]essor's duties and warranties are limited to those expressly stated in this lease and shall not include any implied duties and warranties, now or in the future. No representations or warranties have been made by Lessor other than those expressly contained in this lease." Travis Woods argues that this provision expressly waives all warranties not expressed in the lease; Mortgage Makers argues that the implied warranty is not waived.

We note that there can be no implied warranty concerning a matter specifically covered by the written terms of the lease. Coleman v. Rotana, Inc., 778 S.W.2d 867, 871 (Tex. App.--Dallas 1989, writ denied) (citing Exxon Corp. v. Atlantic Richfield Co., 678 S.W.2d 944, 947 (Tex. 1984)).

3. The entire provision reads:

8.1 Maintenance and Repairs by Lessor Lessor shall repair and/or replace, as needed, the following items as a building expense under paragraph 32.1, so long as they are building standard items: light bulbs, ballasts, and fixtures; plumbing; hardware; appliances; doors; and wall and window coverings. Lessor shall use diligence to provide for the reasonable cleaning, maintenance, repair, reconnection of interrupted utilities or services, and landscaping of common areas, subject to any reimbursement obligations of Lessee under paragraph 8.2. . . .

4.

32.1 Building Operating Expense In addition to the monthly base rent in paragraph 2.1, Lessee shall pay additional rent on a monthly basis, equivalent to Lessee's prorata share of actual building operating expenses as per Exhibit C. . . .

  Exhibit C provides: Exhibit C - Building Operating Expense Passthrough Calculations - (c) DEFINITION OF BUILDING OPERATING EXPENSES. Building operating expenses for each calendar year shall include: . . . roof repairs, . . . and other maintenance expenses; . . . .

5.

8.2 Maintenance and Repairs by Lessee Lessee shall promptly reimburse Lessor for the cost of repairing or replacing non-building standard items and the cost of repairing or replacing damage which is cased inside Lessee's office space by Lessee, Lessee's agents, employees, family, or licensees, invitees, visitors, or customers or outside Lessee's office space by lessee or Lessee's employee's [sic], agents or contractors. . . .Lessee shall pay for replacement of all non-building standard light bulbs and for unstopping any drains or water closets in Lessee's office space. . . .

6.

18.1 Default by Lessor Lessee shall be entitled to recover actual damages and terminate this lease if (1) Lessor fails to pay any sum due and owing to Lessee within 7 days after written demand from Lessee, or (2) Lessor remains in default on any other obligation for 7 days after Lessee's written demand for performance. However, Lessor shall not be in default if Lessor promptly commences to cure such noncompliance and diligently proceeds in good faith to cure same after receiving written notice of such default. . . .

WP="BR2">

Lee Yeakel, Justice

Before Chief Justice Aboussie, Justices Jones and Yeakel

Affirmed

Filed: August 12, 1999

Do Not Publish

1. Travis Woods did not challenge the trial court's findings of fact. Generally, unchallenged findings of fact are binding on appeal. See Burrows v. Miller, 797 S.W.2d 358, 360 (Tex. App.--Tyler 1990, no writ). When accompanied by a statement of facts, findings of fact will be sustained on appeal if any evidence supports them. Id. at 361; 4 Texas Civil Practice § 20.14, at 27 (Diane M. Allen et al. eds., 1992 ed.).

2. The lease provides that "[l]essor's duties and warranties are limited to those expressly stated in this lease and shall not include any implied duties and warranties, now or in the future. No representations or warranties have been made by Lessor other than those expressly contained in this lease." Travis Woods argues that this provision expressly waives all warranties not expressed in the lease; Mortgage Makers argues that the implied warranty is not waived.

We note that there can be no implied warranty concerning a matter specifically covered by the written terms of the lease. Coleman v. Rotana, Inc., 778 S.W.2d 867, 871 (Tex. App.--Dallas 1989, writ denied) (citing Exxon Corp. v. Atlantic Richfield Co., 678 S.W.2d 944, 947 (Tex. 1984)).

3. The entire provision reads:

8.1 Maintenance and Repairs by Lessor Lessor shall repair and/or replace, as needed, the following items as a building expense under paragraph 32.1, so long as they are building standard items: light bulbs, ballasts, and fixtures; plumbing; hardware; appliances; doors; and wall and window coverings. Lessor shall use diligence to provide for the reasonable cleaning, maintenance, repair, reconnection of interrupted utilities or services, and landscaping of common areas, subject to any reimbursement obligations of Lessee under paragraph 8.2. . . .

4.

32.1 Building Operating Expense In addition to the monthly base rent in paragraph 2.1, Lessee shall pay additional rent on a monthly basis, equivalent to Lessee's prorata share of actual building operating expenses as per Exhibit C. . . .

  Exhibit C provides: Exhibit C - Building Operating Expense Passthrough Calculations - (c) DEFINITION OF BUILDING OPERATING EXPENSES. Building operating expenses for each calendar year shall include: . . . roof repairs, . . . and other maintenance expenses; . . . .

5.

8.2 Maintenance and Repairs by Lessee Lessee shall promptly reimburse Lessor for the cost of repairing or replacing non-building standard items and the cost of repairing or replacing damage which is cased inside Lessee's office space by Lessee, Lessee's agents, employees, family, or licensees, invitees, visitors, or customers or outside Lessee's office space by lessee or Lessee's employee's [sic], agents or contractors. . . .Lessee shall pay for replacement of all non-building standard light bulbs and for unstopping any drains or water closets in Lessee's office space. . . .

6.

18.1 Default by Lessor Lessee shall be entitled to recover actual damages and terminate this lease if (1) Lessor fails to pay any sum due and owing to Lessee within 7 days after written demand from Lessee, or (2) Lessor remains in default on any other obligation for 7 days after Lessee's written demand for performance. However