No. 03-15-00088-CV 

 

IN THE THIRD COURT OF APPEALS 

AUSTIN, TEXAS 

 

GRAYCO TOWN LAKE INVESTMENT 2007, LP 

Appellant, 

 

v. 

 

COINMACH CORPORATION 

Appellee. 

 

 

On Appeal from the County Court at Law Number 1 

of Travis County, Texas, Trial Court Case No. C-1-CV-08-09655, 

Hon. Eric Shepperd, Presiding 

 

 

BRIEF OF APPELLANT 

 

Dobrowski, Larkin & Johnson LLP 

Frederick T. Johnson 

SBN 00785429 

Cody W. Stafford 

SBN 24068238 

Akilah F. Craig 

SBN 24076194 

4601 Washington Ave, Suite 300 

Houston, Texas 77007 

Counsel for Appellant 

 

ORAL ARGUMENT REQUESTED May 6, 2015

ACCEPTED

03-15-00088-CV

5180660

THIRD COURT OF APPEALS

AUSTIN, TEXAS

5/6/2015 4:01:45 PM

JEFFREY D. KYLE

CLERK

 FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 5/6/2015 4:01:45 PM JEFFREY D. KYLE Clerk
ii 

IDENTITY OF PARTIES AND COUNSEL 

Appellant: Grayco Town Lake Investment 

2007, LP 

 

Counsel for Appellant: Frederick T. Johnson 

SBN 00785429 

Cody W. Stafford 

SBN 24068238 

Akilah F. Craig 

SBN 24076194 

Dobrowski, Larkin & Johnson LLP

4601 Washington Ave, Suite 300 

Houston, Texas 77007 

 

Appellee: Coinmach Corporation 

 

Counsel for Appellee: R. Kemp Kasling 

Kasling, Hemphill, Dolezal & 

Atwell, LLP 

301 Congress Avenue, Suite 300 

Austin, Texas 78701 

 

 J. Bruce Bennett 

Cardwell, Hart & Bennett, LLP 

807 Brazos, Suite 1001 

Austin, Texas 78701 

 

Trial Court: Hon. Eric Shepperd 

Judge, County Court at Law No. 1 

Travis County Courthouse 

1000 Guadalupe, Room 206 

Austin, TX 78701 
iii 

TABLE OF CONTENTS 

Page 

RECORD REFERENCES .............................................................................................. x

STATEMENT OF THE CASE ...................................................................................... xi

STATEMENT REGARDING ORAL ARGUMENT .................................................... xii

ISSUES PRESENTED ............................................................................................... xiii

STATEMENT OF FACTS ............................................................................................. 1

A. THE PARTIES. .................................................................................................... 1

B. THE 1992 LAUNDRY LEASE. ............................................................................... 2

C. THE 2002 LAUNDRY LEASE. ............................................................................... 2

D. GRAYCO PURCHASES REGATTA. ......................................................................... 5

E. GRAYCO TRIES TO OPERATE REGATTA. ............................................................... 7

F. COINMACH’S REVENUES AT REGATTA STEADILY DECLINED. ............................... 8

G. GRAYCO IS FORCED TO CLOSE REGATTA. ............................................................ 8

H. THE TRIAL. ........................................................................................................ 9

SUMMARY OF ARGUMENT ..................................................................................... 10

STANDARD OF REVIEW ........................................................................................... 11

A. LEGAL SUFFICIENCY. ....................................................................................... 11

B. FACTUAL SUFFICIENCY. ................................................................................... 12
iv 

C. CONCLUSIONS OF LAW. .................................................................................... 12

LEGAL ELEMENTS OF CAUSES OF ACTION ....................................................... 13

A. BREACH OF CONTRACT. .................................................................................... 13

B. COVENANT OF QUIET ENJOYMENT. .................................................................. 13

ARGUMENT ................................................................................................................ 14

A. GRAYCO WAS A BONA FIDE PURCHASER AND NOT BOUND BY 

THE 2002 LEASE. ............................................................................................. 14

1. The 2002 Lease was an encumbrance. ...................................................... 15

2. Grayco had no notice of the 2002 Lease. ................................................... 17

a. Grayco did not have actual or inquiry notice. ....................................... 18

b. Grayco did not have constructive notice. ............................................... 20

c. The judgment must be reversed. ........................................................... 23

B. ALTERNATIVELY, EVEN IF GRAYCO WAS SUBJECT TO THE 2002 LEASE,

THE JUDGMENT MUST STILL BE REVERSED. ...................................................... 24

1. Grayco’s closure of Regatta did not breach the 2002 Lease. .................... 25

2. Even if Grayco breached the 2002 Lease, Coinmach suffered 

no damages. ................................................................................................ 27

a. The 2002 Lease did not guarantee any revenue or profits 

from Grayco. ........................................................................................... 28

b. Coinmach’s alleged profits are too speculative. .................................... 30

3. Coinmach’s damages calculations are legally and factually 

untenable. ................................................................................................... 32
v 

a. Mr. Kemmerer incorrectly determined when damages 

began to accrue. ...................................................................................... 32

b. Mr. Kemmerer incorrectly included reimbursement of the lease 

bonus/decoration allowance. .................................................................. 37

c. Mr. Kemmerer’s daily average collection determination 

was arbitrary. ......................................................................................... 37

PRAYER ....................................................................................................................... 39

 
vi 

INDEX OF AUTHORITIES 

Cases

2616 S. Loop L.L.C. v. Health Source Home Care, Inc., 

201 S.W.3d 349 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ....... 15 

Abraxas Petroleum Corp. v. Hornburg, 

20 S.W.3d 741 (Tex. App.—El Paso 2000, no pet.)............................... 40 

Anadarko E & P Co. v. Clear Lake Pines, Inc., 

03-04-00600-CV, 2005 WL 1583506 (Tex. App.—Austin 

July 7, 2005, no pet.) ............................................................................. 17 

Burlington N. & Santa Fe Ry. v. S. Plains Switching, Ltd., 

174 S.W.3d 348 (Tex. App.—Fort Worth 2005, pet. denied) ............... 13 

Cain v. Bain, 

709 S.W.2d 175 (Tex. 1986) ................................................................... 13 

Catalina v. Blasdel, 

881 S.W.2d 295 (Tex. 1994) ................................................................... 11 

Chandler v. Darwin, 

281 S.W.2d 363 (Tex. App.—Dallas 1955, no writ) .............................. 20 

City of Beaumont v. Moore, 

202 S.W.2d 448 (Tex. 1947) ................................................................... 18 

City of Dallas v. Village of Forest Hills, L.P., Phase I, 

931 S.W.2d 601 (Tex. App.—Dallas 1996, no writ) .............................. 35 

City of Keller v. Wilson, 

168 S.W.3d 802 (Tex. 2005) ....................................................... 11, 12, 37 

Colvin v. Alta Mesa Res., Inc., 

920 S.W.2d 688 (Tex. App.—Houston, writ denied) ............................ 16 

Cooksey v. Sinder, 

682 S.W.2d 252 (Tex. 1984) ................................................................... 16 
vii 

Flack v. First Nat’l Bank, 

226 S.W.2d 628 (Tex. 1950) ............................................................. 20, 21 

Hampshire v. Greeves, 

130 S.W. 665 (Tex. Civ. App. 1910), aff’d, 143 S.W. 147 

(Tex. 1912) ............................................................................................. 17 

Holmes v. P.K. Pipe & Tubing, Inc., 

856 S.W.2d 530 (Tex. App.—Houston [1st Dist.] 1993, no writ) ......... 14 

Holt Atherton Indus., Inc. v. Heine, 

835 S.W.2d 80 (Tex. 1992) ..................................................................... 35 

HTM Restaurants, Inc. v. Goldman, Sachs & Co., 

797 S.W.2d 326 (Tex. App.—Houston [14th Dist.] 1990, 

writ denied) ............................................................................................ 36 

Kindred v. Con/Chem, Inc., 

650 S.W.2d 61 (Tex. 1983) ..................................................................... 12 

Latham v. Miller, 

250 S.W.2d 302 (Tex. App.—Austin 1952, no writ) ............................. 18 

Levine v. Turner, 

264 S.W.2d 478 (Tex. Civ. App.—El Paso 1954, writ dism’d) ............. 18 

Madison v. Gordon, 

39 S.W.3d 604 (Tex. 2001) ............................................................. passim 

Material P’ships, Inc. v. Ventura, 

102 S.W.3d 252 (Tex. App.—Houston [14th Dist.] 2003, 

pet denied) ............................................................................................. 11 

Mathis v. Wherry, 

45 S.W.2d 700 (Tex. Civ. App.—Beaumont 1932, no writ) .................. 39 

Mead v. Johnson Grp., Inc., 

615 S.W.2d 685 (Tex. 1981) ................................................................... 40 

Nelson Cash Register, Inc. v. Data Terminal Sys., Inc., 

671 S.W.2d 594 (Tex. App.—San Antonio 1984, no writ) .................... 41 
viii 

New York Life Ins. Co. v. Miller, 

114 S.W.3d 114 (Tex. App.—Austin 2003, no pet.) .............................. 14 

Pace Corp. v. Jackson, 

248 S.W.2d 340 (Tex. 1955) ................................................................... 34 

Portman v. Earnhart, 

343 S.W.2d 294 (Tex. App.—Dallas 1960, writ ref’d n.r.e.) ................. 24 

Realty Portfolio, Inc. v. Hamilton (In re Hamilton), 

125 F.3d 292 (5th Cir. 1997) ................................................................. 21 

Richardson v. Hughes, 

146 S.W.2d 255 (Tex. App.—Austin 1940, no writ) ............................. 21 

Serrano v. Union Planters Bank, N.A., 

162 S.W.3d 576 (Tex. App.—El Paso 2004, pet. denied) ..................... 29 

Smith v. Smith, 

22 S.W.3d 140 (Tex. App.—Houston [14th Dist.] 2000, no pet.) ......... 13 

Southwest Battery Corp. v. Owen, 

115 SW.2d 1097 (Tex. 1938) .................................................................. 34 

Stewart v. Basey, 

245 S.W.2d 484 (1952) ........................................................................... 40 

Strong v. Strong, 

98 S.W.2d 346 (Tex. Comm’n App. 1936, no writ) ............................... 26 

Uniroyal Goodrich Tire Co. v. Martinez, 

977 S.W.2d 328 (Tex. 1998) ................................................................... 12 

Winograd v. Clear Lake City Water Auth., 

811 S.W.2d 147 (Tex. App.—Houston [1st Dist.] 1991, 

writ denied) ............................................................................................ 40 

Woodward v. Ortiz, 

237 S.W.2d 286 (Tex. 1951) ................................................................... 21 

 
ix 

Statutes

TEX. PROP. CODE § 13.001(a) .................................................................... 20 

TEX. PROP. CODE § 13.002 (West 2002) .................................................... 24 

TEX. PROP. CODE § 5.024 ........................................................................... 17 

 
x 

RECORD REFERENCES 

Appellant uses the following format for citations to the Record: 

CR __ Clerk’s Record 

1 RR __ Volume one of the Reporter’s Record 

2 RR __ Volume two of the Reporter’s Record 

3 RR __ Volume three of the Reporter’s Record 

Ex. P- __ Plaintiff/Appellee’s exhibits to the Reporter’s Record 

Ex. D- __ Defendant/Appellant’s exhibits to the Reporter’s 

Record 

Ex. C- __ Court’s exhibits to the Reporter’s Record 
xi 

STATEMENT OF THE CASE 

This is a contract dispute involving a laundry room lease. The 

laundry room lessee, Coinmach Corporation (“Coinmach” or “Appellee”), 

sued the lessor, Grayco Town Lake Investment 2007, LP (“Grayco” or 

“Appellant”), for alleged breach of the lease. Following a bench trial, the 

trial court (Hon. Eric Shepperd, presiding) entered judgment in favor of 

Coinmach, and awarded $67,122.19 in actual damages (mainly lost 

profits), $19,695.31 in prejudgment interest, and $44,005.14 in 

attorneys’ fees. 

 
xii 

STATEMENT REGARDING ORAL ARGUMENT 

Oral argument would be helpful. First, the Court would benefit 

from the ability to discuss the appeal with counsel because the factual 

history of the case is somewhat complicated. Second, oral argument will 

likely save the Court time in understanding and handling the evidence. 

 
xiii 

ISSUES PRESENTED 

1. Did the trial court err in entering judgment for Coinmach for 

breach of the laundry lease when Grayco was not a party to or 

bound by the contract? 

2. Did Grayco breach any material obligation of the laundry lease, in 

light of the absence of any restrictions on its use of its own 

property? 

3. Did Coinmach suffer any damages for any breach of the laundry 

lease, which did not guarantee revenue? 

4. Did the trial court err by awarding damages to Coinmach that are 

not supported by the evidence, and were not caused by any alleged 

breach? 
1 

STATEMENT OF FACTS 

This case centers on a laundry lease at the Regatta Apartments 

(“Regatta”), which was an apartment complex on Riverside Drive in 

Austin, Texas. The Regatta was owned by Foley Capital Asset, LLC 

(“Foley”) and managed by Bridge Management Company (“Bridge”). 

Grayco bought Regatta in 2007, was unaware of the terms of the 

laundry lease encumbering Regatta, and closed Regatta later that year. 

Coinmach sued Grayco in 2008 for breach of the lease, and argued the 

lease required Grayco to keep Regatta—and the laundry room—open 

even if no one wanted to live there or use the laundry machines. The 

story of the disputed laundry lease, however, begins much earlier than 

2007. 

A. THE PARTIES. 

Appellant Grayco was a partnership created to develop and 

revitalize certain commercial property in the Austin area. As part of 

that effort, Grayco acquired Regatta in 2007. 

Appellee Coinmach is a laundry service company. In the 2007 

timeframe, Coinmach leased space in residential apartment buildings 
2 

and hoped residents would use its coin-operated washing and drying 

machines. 

B. THE 1992 LAUNDRY LEASE. 

In March 1992—long before the parties here were involved with 

Regatta—McNair’s Coin Laundry Company contracted with De Norde 

Construction Co., then-owner of Regatta, for the lease of a laundry room 

(the “1992 Lease”). Ex. D-1. Tab A. As is customary, the 1992 Lease was 

filed in the Travis County Real Property Records. See id. The 1992 

Lease provided that the lessee and lessor would share the gross receipts 

from the laundry room 50/50, and had a 10-year term that renewed 

automatically unless notice of termination was given 90 days prior to 

the expiration date. Id. By default, then, the 1992 Lease would be 

expected to renew in 2002. 

C. THE 2002 LAUNDRY LEASE. 

Ten years later, Coinmach, successor-in-interest to McNair’s Coin 

Laundry Company, and Bridge executed a new laundry lease (the “2002 

Lease”). Ex. D-2. Tab B. Unlike the 1992 Lease, however, the 2002 

Lease was not filed with the Travis County Real Property Records. 2 RR 

23:24-24:1. Instead, Bridge and Coinmach executed a Memorandum of 
3 

Lease on April 22, 2002, which was then filed in the Travis County Real 

Property Records. Ex. D-4. Tab C. Though recorded, the Memorandum 

of Lease makes no reference to the unrecorded 2002 Lease, which 

Coinmach never included or identified in the public record. 2 RR 23:21-

23. 

The terms of the 2002 Lease were similar to the 1992 Lease in 

some respects, but quite different in others. For instance, like the 1992 

Lease, the 2002 Lease contained a 10-year term (expiring in 2012). Ex. 

D-2, GP 000004. The most notable difference between the two leases is 

how they divided revenue from the laundry machines among the lessor 

and lessee. 2 RR 86:18-25. The 2002 Lease contained the following 

language: 

LESSEE shall be entitled to the right of exclusive 

installation and operation of the equipment on the above 

described premises for which LESSEE shall pay LESSOR a 

rental of Fifty (50%) percent of the gross receipts. The rental 

will be paid monthly by check to Lessor, provided however, 

that the Lessee shall always be entitled to receive at 

minimum compensation $45.00 per machine, per month. 

Ex. D-2 GP 000004. 

Unlike the 1992 Lease, which divided gross receipts equally 

between lessor and lessee, the 2002 Lease allowed the lessee 
4 

(Coinmach) to get the first $45 per machine, per month in gross 

receipts.1 2 RR 86:21-25. If a machine made more than $45, the 

remainder was divided equally between the lessor and the lessee. Id. If 

a machine did not make $45 in a month, however, lessor was not 

required to pay lessee the difference. 2 RR 25:4-7; 2 RR 87:1-9. In other 

words, the $45 was not a monthly guarantee of revenue—it only 

assured that if a machine made revenue, Coinmach received the first 

dollars up to $45.00. Id. 

The 2002 Lease also contained the following provision: “Lessee 

shall have exclusive and quiet use and enjoyment of the premises leased 

herein during the Lease term.” Ex. D-2, GP 000004 (This provision, 

along with the revenue provision discussed above, forms the basis of 

Coinmach’s two causes of action.). 

At the same time they executed the 2002 Lease, Coinmach and 

Bridge executed a Supplemental Agreement. Under that agreement, 

 

1 Coinmach kept 24 machines—12 washers and 12 dryers—at Regatta. Ex. D-26. 
5 

Coinmach paid Bridge a $14,000 lease bonus/decoration allowance. Ex. 

D-2, GP 000006; Ex. D-3.2 

D. GRAYCO PURCHASES REGATTA. 

On December 6, 2006, an entity called Grayco Partners entered 

into a Real Estate Contract for the purchase of Regatta from Foley. Ex. 

D-5. Nearly six months later, on April 27, 2007, Grayco Partners 

assigned the Real Estate Contract to Grayco. Ex. D-10. Grayco acquired 

Regatta on May 8, 2007. Ex. D-11. Additionally, Foley and Grayco 

executed an Assignment and Assumption of Leases and Service 

Contracts (the “Assignment”). Ex. D-13. Tab D. The Assignment 

specifically enumerated the Leases and Service Contracts Grayco would 

acquire from Foley: 

 

2 What, exactly, the lease bonus was used for is unclear. What is clear, however, is 

that Grayco did not receive any of the $14,000, a fact that will become important 

later. 2 RR 87:12-24. 
6 

Ex. D-13, GP 000064 (emphasis added). Notably, the 2002 Lease was 

not included in the assignment. Id.

Prior to acquiring Regatta in May 2007, Grayco was unaware of 

the 2002 Lease. 2 RR 86:1-8. Indeed, during its due diligence, Grayco 

discovered the 1992 Lease and the Memorandum of Lease in the Travis 

County records. 2 RR 83:17-24. Grayco reviewed the 1992 Lease, 

discovered the 10-year term and automatic renewal provisions, and 

reasonably concluded that the Memorandum of Lease memorialized the 

expected renewal and extension of the 1992 Lease by the new parties to 

that agreement, Coinmach and Bridge. That understanding was 

consistent with, and justified by, the representations in the Assignment. 

2 RR 85:14-25. Nothing in the real property records indicated otherwise, 

and no one informed Grayco differently. 2 RR 85:22-86:8. 
7 

E. GRAYCO TRIES TO OPERATE REGATTA. 

Grayco intended to operate Regatta—and improve the property for 

its tenants—for at least one year. 2 RR 88:8-24. Grayco even 

approached Coinmach about renovating the laundry room, which had 

fallen into disrepair, in an effort to improve conditions and entice 

residents to use Coinmach’s laundry machines. Ex. D-9; Ex. C-1, 17:3-

20. However, Grayco was unable to fulfill its plan. 

Regatta was beyond saving. 2 RR 90:7-17. The property was 

plagued by vagrancy, vandalism, crime, and significant deferred 

maintenance issues. 2 RR 26:25-27:2, 27:11-12, 27:17-19, 89:9-14. 

Criminal activity was rampant and staff members were fearful of 

working at Regatta. Ex. C-1, 13:23-10. In fact, Grayco’s property 

managers spent most of their time keeping vagrants out of Regatta. Id. 

Moreover, Regatta’s previous owner failed to screen many of the 

residents, which created a liability issue if Grayco renewed their leases. 

2 RR 88:11-25. These issues, of course, took a serious toll on occupancy. 

When Grayco acquired Regatta, its occupancy was only 50-60%, and 

declining. Ex. C-1, 28:15-23:29, 29:23-30:1; 2 RR 97:22-98:1. 
8 

F. COINMACH’S REVENUES AT REGATTA STEADILY DECLINED. 

Perhaps like the proverbial canary in the mine, Coinmach’s 

revenues from the laundry lease had steadily declined at Regatta, even 

before Grayco became the owner. In fact, the only month in 2007 when 

all 24 machines on average made $45 was March. Ex. D-25, GP 000009. 

Based on Coinmach’s collection data, excluding March, there was no 

month in 2007 in which all 24 machines made $45 each.3 Id. at GP 

000008-9. 

Indeed, by the time Grayco acquired and began operating Regatta, 

Coinmach may never have received $45 per machine. 2 RR 25:11-23. 

G. GRAYCO IS FORCED TO CLOSE REGATTA. 

Ultimately, as a result of crime, the condition of the property, and 

liability concerns, Grayco closed Regatta at the end of October 2007. 2 

RR 90:21-91:1. At that time, occupancy was virtually nil. Ex. C-1, 28:15-

21, 29:6-8. 

After Regatta’s closure, Coinmach informed Grayco, for the first 

time, about the 2002 Lease. 2 RR 86:9-14. Coinmach then claimed 

Grayco had breached that lease, and demanded nearly $100,000 as 

 

3 Indeed, based on Coinmach’s own data, the machines made far less than $45 in 

most months. Ex. D-25, GP 000008-9. 
9 

“damages.” Ex. D-22. Nearly a year later, in September 2008, Coinmach 

sued Grayco for the alleged breach of the 2002 Lease and the 

Supplemental Agreement between Coinmach and Bridge relating to the 

$14,000 lease bonus/decoration allowance. CR 213-16. 

H. THE TRIAL. 

The case finally proceeded to a one-day bench trial in August 

2014. After trial, the court signed a judgment awarding Coinmach 

$67,122.19 in actual damages, $19,695.31 in prejudgment interest, and 

$44,005.14 in attorneys’ fees. Tab E.

Grayco’s motion for new trial was overruled by operation of law. 

Tab F. Grayco timely filed this appeal. CR 508-10. 

 
10 

SUMMARY OF ARGUMENT 

The evidence was both legally and factually insufficient to support 

the judgment against Grayco. 

First, Grayco was a bona fide purchaser of Regatta; it was not 

bound by the unrecorded 2002 Lease. Because Grayco had no 

obligations under the 2002 Lease, it could not have breached that 

agreement. Thus, the trial court’s award of damages for breach of the 

lease is error. 

Second, even if Grayco had been bound by the 2002 Lease, it did 

not breach that agreement. Nothing in the 2002 Lease required Grayco 

to keep Regatta open, maintain any certain occupancy, or force tenants 

to use Coinmach’s laundry machines. As a result, Grayco’s closure of 

Regatta was not a breach. 

Third, even if Grayco breached the 2002 Lease, Coinmach 

sustained no damages because it had no guaranteed revenue. 

Fourth, even if Coinmach had sustained damages, its damages 

calculation was fundamentally flawed and constituted no evidence. 

For these reasons, the Court should reverse the judgment against 

Grayco. 
11 

STANDARD OF REVIEW 

The trial court’s implied findings are reviewed for legal and 

factual sufficiency of the evidence using the same standard applied to a 

jury verdict. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); see 

also City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). 

When the appellate record contains a reporter’s record, as in this 

case, the trial court’s findings of fact are not conclusive on appeal if a 

contrary fact is established as a matter of law or if there is no evidence 

to support the finding. See Material P’ships, Inc. v. Ventura, 102 

S.W.3d 252, 257 (Tex. App.—Houston [14th Dist.] 2003, pet denied). 

A. LEGAL SUFFICIENCY. 

For a legal sufficiency review, the Court should credit evidence 

supporting the judgment if reasonable jurors could, and disregard 

contrary evidence unless reasonable jurors could not. City of Keller, 168 

S.W.3d at 827. A legal sufficiency point must be sustained if the record 

reveals: (1) there is a complete absence of evidence of a vital fact; (2) the 

court is barred by rules of law or of evidence from giving weight to the 

only evidence offered to prove a vital fact; (3) the evidence offered to 

prove a vital fact is no more than a scintilla; or (4) the evidence 
12 

established conclusively the opposite of the vital fact. See Uniroyal 

Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998). More 

than a scintilla of evidence exists if the evidence furnishes some 

reasonable basis for differing conclusions by reasonable minds about a 

vital fact’s existence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 

(Tex. 1983). 

B. FACTUAL SUFFICIENCY. 

For a factual sufficiency review, the Court should consider all of 

the evidence to determine if the finding is so weak or if the evidence to 

the contrary is so overwhelming that it should be set aside and a new 

trial ordered. Burlington N. & Santa Fe Ry. v. S. Plains Switching, Ltd.,

174 S.W.3d 348, 354 (Tex. App.—Fort Worth 2005, pet. denied). 

Findings may be overturned if they are so against the great weight and 

preponderance of the evidence as to be clearly wrong and unjust. Cain 

v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). 

C. CONCLUSIONS OF LAW. 

The trial court’s conclusions of law are reviewed de novo. Smith v. 

Smith, 22 S.W.3d 140, 143-144 (Tex. App.—Houston [14th Dist.] 2000, 

no pet.). 
13 

LEGAL ELEMENTS OF CAUSES OF ACTION 

Coinmach alleged two causes of action: (1) breach of contract; and 

(2) breach of the covenant of quiet enjoyment. 

A. BREACH OF CONTRACT. 

The elements of breach of contract are: (1) that a valid contract 

existed, (2) that the plaintiff performed or tendered performance, 

(3) that the defendant breached the contract, and (4) that the plaintiff 

was damaged as a result of the breach. New York Life Ins. Co. v. Miller, 

114 S.W.3d 114, 121 (Tex. App.—Austin 2003, no pet.). 

B. COVENANT OF QUIET ENJOYMENT. 

A breach of the covenant of quiet enjoyment requires an eviction, 

actual or constructive, brought about by the acts of the landlord, those 

acting for the landlord, or those acting with the landlord's permission. 

Holmes v. P.K. Pipe & Tubing, Inc., 856 S.W.2d 530, 539 (Tex. App.—

Houston [1st Dist.] 1993, no writ); 2616 S. Loop L.L.C. v. Health Source 

Home Care, Inc., 201 S.W.3d 349, 360 (Tex. App.—Houston [14th Dist.] 

2006, no pet.). 

 
14 

ARGUMENT 

Several legal errors by the trial court resulted in a flawed 

judgment. Each of the errors is an independent basis to reverse.4

A. GRAYCO WAS A BONA FIDE PURCHASER AND NOT BOUND BY THE 2002 

LEASE. 

Bona fide purchaser status is a defense against claims and 

encumbrances of third parties. See Madison v. Gordon, 39 S.W.3d 604, 

605 (Tex. 2001). A purchaser who pays value for real property without 

notice of an encumbrance is a bona fide purchaser. Colvin v. Alta Mesa 

Res., Inc., 920 S.W.2d 688, 691 (Tex. App.—Houston, writ denied) 

(citing Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex. 1984). A bona fide 

purchaser takes title free from the encumbrance. Hampshire v. 

Greeves, 130 S.W. 665 (Tex. Civ. App. 1910), aff’d, 143 S.W. 147 (Tex. 

1912). 

Grayco indisputably purchased Regatta in good faith and for 

value. Therefore, the only issues are (1) whether the 2002 Lease was an 

encumbrance; and (2) whether Grayco had notice of the 2002 Lease. 

 

4 Both of Coinmach’s causes of action fail for the same reasons. Both arise directly 

from the 2002 Lease, both are dependent on Grayco being bound by that lease, and 

both gave rise to the same alleged damages (Coinmach sought the same measure of 

damages for both causes of action.). Thus, both causes of action suffer the same 

defects, and neither can support the judgment. 
15 

Because the 2002 Lease is an encumbrance of which Grayco had no 

notice, Grayco is not bound by the laundry lease and could not have 

breached it. 

1. The 2002 Lease was an encumbrance. 

An encumbrance is an interest in realty that diminishes its value 

and is a burden on its transfer. Anadarko E & P Co. v. Clear Lake 

Pines, Inc., 03-04-00600-CV, 2005 WL 1583506 (Tex. App.—Austin July 

7, 2005, no pet.); see also TEX. PROP. CODE § 5.024. Encumbrances 

include: 

[E]very right to, or interest in, the land which may subsist in 

third persons, to the diminution of the value of the land, but 

consistent with the passing of the fee by the conveyance; 

anything that impairs the use or transfer of property or real 

estate.... 

City of Beaumont v. Moore, 202 S.W.2d 448, 454 (Tex. 1947) (emphasis 

added). An encumbrance, then, is any burden resting on property itself, 

or on its title, which tends to lessen its value, or interfere with its free 

enjoyment. Latham v. Miller, 250 S.W.2d 302, 303 (Tex. App.—Austin 

1952, no writ). Generally, a restriction as to the use to which premises 

may be put constitutes an encumbrance. Levine v. Turner, 264 S.W.2d 

478, 480 (Tex. Civ. App.—El Paso 1954, writ dism’d). 
16 

According to Coinmach, the language in the 2002 Lease regarding 

cleaning and maintaining the laundry room, as well as Coinmach’s 

contractual right to quiet enjoyment, prevented Grayco from closing the 

apartments to redevelop the area, which was Grayco’s long-term 

purpose when it purchased Regatta. 2 RR 33:14-34:7. Coinmach’s 

representative, Ed Greene, testified that Grayco was required to 

maintain the laundry room and did not have the right to tear the 

apartment complex down. 2 RR 36:17-37:4. That type of restriction 

encumbers the property, interferes with its value, and impairs its use. 

Indeed, Coinmach’s interpretation of the 2002 Lease would 

prevent Grayco from terminating the 2002 Lease (for any reason, ever), 

and would prevent Grayco from using the property it purchased for any 

purpose other than residences with a Coinmach-controlled laundry 

room. This nonsensical interpretation means Coinmach, mere lessee of 

a laundry room, would have more control over Regatta than Grayco, the 

owner. It is difficult to imagine a heftier burden on Regatta’s use. 

Based on Coinmach’s contentions, because it impaired Regatta’s 

use, the 2002 Lease was an encumbrance. 
17 

2. Grayco had no notice of the 2002 Lease. 

At trial, Coinmach argued that the mere fact that the 2002 Lease 

existed meant Grayco took the property subject to its terms. 2 RR 104:1-

5. The trial court apparently agreed. But that is not the law. Notice—

whether actual, inquiry, or constructive—was required for Grayco to 

acquire the property subject to the 2002 Lease. See Chandler v. Darwin, 

281 S.W.2d 363, 366 (Tex. App.—Dallas 1955, no writ). 

Indeed, under Section 13.001 of the Texas Property Code, an 

unrecorded conveyance of an interest in real property is void as to a 

subsequent purchaser who purchases the property for valuable 

consideration and without notice. TEX. PROP. CODE § 13.001(a). 

To receive bona fide purchaser protection, a party must acquire 

the property in good faith, for value, and without notice of any thirdparty claim or interest. Madison, 39 S.W.3d at 606. Notice is defined as 

information concerning a fact actually communicated to a person, 

derived from a proper source, or presumed by law to have been 

acquired. Flack v. First Nat’l Bank, 226 S.W.2d 628, 631 (Tex. 1950). 

Notice can be actual or constructive. Id. Actual notice results from 

personal information or knowledge, as well as those facts which 
18 

reasonable inquiry would have disclosed. Constructive notice is notice 

the law imputes to a person not having personal information or 

knowledge. Madison, 39 S.W.3d at 606; Flack, 226 S.W.2d at 631-32. 

a. Grayco did not have actual or inquiry notice. 

If a party has knowledge of facts that, if reasonably pursued, 

would have disclosed the existence of an unrecorded encumbrance, they 

will be charged with notice (and bound by the encumbrance). 

Richardson v. Hughes, 146 S.W.2d 255, 258 (Tex. App.—Austin 1940, 

no writ). This is known as inquiry notice. Woodward v. Ortiz, 237 

S.W.2d 286, 289 (Tex. 1951); Realty Portfolio, Inc. v. Hamilton (In re 

Hamilton), 125 F.3d 292, 299 (5th Cir. 1997) (“A hypothetical purchaser 

on inquiry notice is chargeable with imputed knowledge of facts that 

would have been discovered by a reasonably diligent inquiry.”). 

At trial, there was no evidence Grayco had actual notice of the 

2002 Lease. The Assignment executed by Grayco and Foley only 

referenced the 1992 Lease. Ex. D-13, GP 000064. Further, Grayco’s 

corporate representative, John Britton, testified that Grayco conducted 

a due diligence search when it purchased Regatta and only discovered 

the Memorandum of Lease and the 1992 Lease, which was to renew 
19 

automatically in 2002. 2 RR 83:2-4, 83:17-24. And the Memorandum of 

Lease did not identify the 2002 Lease, a fact admitted by Mr. Greene. 2 

RR 23:21-23. Because of the affirmative representations in the 

Assignment and the Memorandum of Lease, Grayco reasonably believed 

that the 1992 Lease renewed and that it governed the relationship 

between Grayco and Coinmach. In fact, Grayco was not informed of the 

2002 Lease until after this dispute arose in late 2007 and early 2008. 2 

RR 86:9-14. Therefore, the only evidence is that Grayco did not have 

actual notice of the 2002 Lease. 

Further, inquiry notice cannot be imputed to Grayco using the 

Memorandum of Lease. Grayco Partners acquired Regatta from Foley. 

Ex. D-5. Foley subsequently assigned all the leases and services 

contracts to Grayco on May 8, 2007. Ex. D-13. Foley failed to identify 

the unrecorded 2002 Lease, and only disclosed the existence of the 

properly recorded1992 Lease. Id. at GP 000064. Prior to the purchase of 

Regatta, Grayco conducted all aspects of due diligence, none of which 

revealed the 2002 Lease. 2 RR 83:2-9; 2 RR 83:17-24. Grayco reasonably 

believed that because the parties to the Memorandum of Lease were 

different from the parties to the 1992 Lease, the Memorandum of Lease 
20 

served as notice that the two new parties had adopted and reaffirmed 

the 1992 Lease, which was set to automatically renew in 2002, the same 

year the Memorandum of Lease was executed. 2 RR 85:22-25. Even if a 

duty of inquiry arose based on the Memorandum of Lease, the evidence 

is undisputed that Grayco diligently inquired and was not made aware 

of the existence of the 2002 Lease. 

b. Grayco did not have constructive notice. 

Purchasers of property are charged with constructive notice of the 

instruments properly recorded in the county where the property is 

located. TEX. PROP. CODE § 13.002 (West 2002) (“An instrument that is 

properly recorded in the proper county is . . . notice to all persons of the 

existence of the instrument, . . .”). But, while a purchaser is bound with 

constructive notice of all recorded instruments lying within his chain of 

title, the record of a deed or instrument laying outside of his chain of 

title imports no notice. Portman v. Earnhart, 343 S.W.2d 294, 297 (Tex. 

App.—Dallas 1960, writ ref’d n.r.e.). 

Importantly, the 2002 Lease—unlike the 1992 Lease—was not 

filed of record in Travis County (or anywhere else). 2 RR 23:24-24:1. 

Hence, there was no constructive notice of the 2002 Lease. The 2002 
21 

Lease, though executed prior to Grayco’s acquisition of the property, lay 

outside of Grayco’s chain of title because Coinmach failed to record the 

instrument. The Memorandum of Lease did not place the 2002 Lease 

within the chain of title. As previously discussed, the Memorandum of 

Lease is silent as to which lease it referred, and the only lease on file to 

which it could reasonably refer was the 1992 Lease. 2 RR 23:21-23. 

Because constructive notice can only be imputed when instruments are 

within the chain of title, the unrecorded 2002 Lease—lying outside of 

the chain of title—imputed no notice to Grayco. 

Moreover, the Assignment did not provide Grayco with 

constructive notice of the 2002 Lease. Rather, the Assignment 

confirmed Grayco’s reasonable belief that Coinmach acquired the 1992 

Lease from its predecessor-in-interest and allowed the 1992 Lease to 

renew for an additional 10 years. 

Coinmach also argued that the presence of its laundry machines 

in the Regatta laundry room was constructive notice to Grayco of the 

2002 Lease. Though the law imputes constructive knowledge where a 

subsequent purchaser has a duty to ascertain the rights of a party in 

possession, the duty to ascertain arises only if the possession is visible, 
22 

open, exclusive, and unequivocal. Madison, 39 S.W.3d at 606. However, 

possession that is ambiguous or equivocal, which may appear 

subservient or attributable to the possession of the holder of the legal 

title, is not sufficiently indicative of ownership to impute constructive 

notice. Id. Additionally, when an occupant’s possession is consistent or 

compatible with another’s ownership assertion, the occupant’s 

possession cannot be said to be unequivocal. Id. at 607; Strong v. 

Strong, 98 S.W.2d 346, 350 (Tex. Comm’n App. 1936, no writ). In that 

case, no notice is imputed. 

Here, Coinmach’s possession was arguably open and visible, based 

on the presence of its laundry machines in the laundry room. 

Importantly, however, Coinmach’s open and visible possession was 

compatible with the 1992 Lease, of which Grayco was aware. There was 

no indication and no reason for Grayco to believe a subsequent—and 

substantially different—lease was executed by Coinmach in 2002. The 

issue is whether Grayco knew of—and was bound by—the 2002 Lease, 

which was not recorded and not provided to Grayco. Even if Grayco was 

aware that a laundry lease existed, that does not mean Grayco had 

constructive knowledge that the unrecorded 2002 Lease existed or what 
23 

its terms were. Indeed, the sole evidence available to Grayco was that 

the only laundry lease was the properly recorded 1992 Lease. Based on 

the information available through diligent search and inquiry, Grayco 

reasonably determined Coinmach’s rights, if any, arose out of the 1992 

Lease. 

Further, the mere presence of Coinmach’s laundry machines does 

not qualify as “unequivocal possession” of the premises that was 

incompatible with Grayco’s reasonable understanding that only the 

1992 Lease was in place. Rather, Coinmach’s machines confirmed 

Grayco’s understanding that the 1992 Lease was effective and would 

govern the parties’ interactions. So, no constructive knowledge of the 

2002 Lease can be imputed to Grayco. 

c. The judgment must be reversed. 

The only evidence presented by either Coinmach or Grayco is that 

Grayco did not have actual knowledge of the 2002 when it acquired 

Regatta. 2 RR 36:7-9, 86:1-4, 86:9-14. And there was nothing that put 

Grayco on inquiry notice of the 2002 Lease. Grayco’s belief that the 

Memorandum of Lease demonstrated Coinmach’s adoption and renewal 

of the 1992 Lease was reasonable. Finally, there was no constructive 
24 

notice of the 2002 Lease because the 2002 Lease was never filed and the 

Memorandum of Lease did not identify or refer to the 2002 Lease. 2 RR 

36:3-6, 85:14-25. Thus, Grayco proved that it had no notice—actual, 

inquiry, or constructive—of the 2002 Lease. Because by Coinmach’s 

interpretation the 2002 Lease was an encumbrance and Grayco 

purchased Regatta without notice, Grayco is not subject to, and is 

protected from, the 2002 Lease. 

Importantly, Coinmach chose to sue Grayco for an alleged breach 

of only the 2002 Lease. CR 214; 2 RR 84:7-9. Because Grayco was not 

bound by the 2002 Lease, Coinmach cannot recover damages from 

Grayco arising out of the 2002 Lease. Further, because Coinmach did 

not allege breach of the 1992 Lease, Coinmach cannot recover any 

damages from Grayco arising out of the 1992 Lease. 

As a result, the trial court’s judgment awarding damages for a 

breach of the 2002 Lease must be reversed. 

B. ALTERNATIVELY, EVEN IF GRAYCO WAS SUBJECT TO THE 2002 LEASE, 

THE JUDGMENT MUST STILL BE REVERSED. 

Even if Grayco acquired Regatta subject to the terms of the 2002 

Lease, the trial court’s judgment must still be reversed because (1) the 

2002 Lease did not prevent Grayco from closing Regatta, and Grayco 
25 

could not have breached by doing so; (2) even if Regatta’s closure was a 

breach, Coinmach sustained no damages because there was no 

guarantee of income; and (3) Coinmach’s calculation of damages is so 

flawed that it constitutes no evidence. 

1. Grayco’s closure of Regatta did not breach the 2002 Lease. 

There is no evidence to support Coinmach’s breach of contract 

claim; thus, the evidence is insufficient to support the judgment. 

Serrano v. Union Planters Bank, N.A., 162 S.W.3d 576, 580 (Tex. 

App.—El Paso 2004, pet. denied). Coimach failed to identify a single 

term, clause, condition or obligation in the 2002 Lease that Grayco 

breached. In fact, Coinmach’s corporate representative admitted to the 

following, proving Grayco did not breach the 2002 Lease when it closed 

Regatta: 

 There is no provision in the 2002 Lease obligating Grayco to 

maintain a certain number of occupants at Regatta. 2 RR 

26:8-11. 

 There is no provision preventing Grayco from tearing down 

Regatta. 2 RR. 26:12-14. 

 There is no provision in the 2002 Lease requiring Grayco to 

use its best efforts to ensure tenants use the laundry room. 2 

RR 26:15-18 
26 

Even under Coinmach’s interpretation, Grayco could choose to renew—

or not renew—as many or as few tenant leases as it wished without 

beaching any contractual obligations to Coinmach. This interpretation 

makes Coinmach’s current position untenable. If Grayco could exercise 

its business judgment and decide not to renew all of the tenant leases 

(as it did), then Coinmach’s laundry machines would inevitably make 

no revenue. Coinmach admits this would not constitute a breach of the 

2002 Lease. 2 RR 26:8-11, 35:21-36:2, 36:17-22. Thus, Coinmach would 

not be entitled to any damages, however they be characterized. 

Coinmach’s position now, and at trial, is at odds with its 

admission. If Grayco could properly lease down Regatta—resulting in 

Coinmach’s laundry machines accruing no revenue—then Grayco could 

close Regatta completely. The result to Coinmach is the same. Yet 

Coinmach claims without support that only the latter was a breach of 

the 2002 Lease. That is nonsensical. 

Further, Grayco’s corporate representative testified many of the 

tenants of Regatta at the time Grayco acquired the property were 

unqualified and created liability concerns for Grayco. 2 RR 89:9-25. 

Grayco could not renew many of the tenant leases for two main reasons: 
27 

(1) many of the existing tenants could not pass required background 

checks; and (2) if Grayco allowed unqualified tenants to live at Regatta, 

that would violate Grayco’s insurance policy. 2 RR 93:1-7. Further, 

when Grayco acquired the property, occupancy was already low, 

(between 50-60 percent) and declining. 2 RR 97:22-98:1; Ex. C-1 28:15-

21. And, as Grayco’s corporate representative clarified, occupancy and 

tenancy are two different concepts: many of Regatta’s occupants were 

vagrants and squatters who did not pay rent. 2 RR 98:4-7. 

Because there were no provisions in the 2002 Lease requiring any 

minimum occupancy or requiring mandatory use of the laundry room by 

tenants, Grayco’s good faith business decision to lease down and 

ultimately close Regatta was not a breach of the 2002 Lease. The trial 

court’s finding to the contrary is error and requires reversal. 

2. Even if Grayco breached the 2002 Lease, Coinmach suffered 

no damages. 

Even assuming, arguendo, that Grayco could have breached the 

2002 Lease, Coinmach could not have suffered damages as a matter of 

law. And, in any event, Coinmach failed to present legally or factually 

sufficient evidence of any damages. 
28 

a. The 2002 Lease did not guarantee any revenue or 

profits from Grayco. 

As previously discussed, the 2002 Lease did not guarantee 

Coinmach any minimum monthly earnings for the laundry machines. 2 

RR 24:8-11, 24:16-19, 25:4-7. If tenants chose not to use the laundry 

machines, or if there were no tenants to use them, the laundry 

machines would accumulate zero revenue, and Coinmach would not be 

entitled to anything from Grayco. 2 RR 26:15-18, 35:24-36:2. As a 

result, Coinmach knew when it signed the 2002 Lease that part of its 

bargain was inherent uncertainty of future revenues and its inherent 

dependence on the complex’s owner’s plans for development and leasing. 

Perhaps a competitor might open a laundromat next door to Regatta 

and attract tenants with newer machines and cheaper prices. Perhaps 

Regatta could become a haven for college students who took their 

clothes home for their parents to launder. Or perhaps Regatta’s owner 

would close the apartments for any number of business reasons. These 

were all risks Coinmach knowingly accepted in the 2002 Lease. Of 

course, Coinmach was handsomely rewarded for its risks for many 

years, and made substantial profits from its machines. Ex. D-25, GP 
29 

000010-13.5 That said, Coinmach never had any contractuallyguaranteed revenues, and it knew that from the outset. 

As previously discussed, the 2002 Lease gave Coinmach the first 

$45 per machine, per month (assuming the machine made revenue). Ex. 

D-2, GP 000004. Coinmach was not guaranteed $45 per machine.6 2 RR 

24:12-19. Instead, if the machines made $45, Coinmach would be 

entitled to that amount, and Grayco would receive no compensation for 

the lease of its laundry room that particular month. 2 RR 24:20-22. If 

the machines made less than $45, Coinmach received whatever the 

machines generated. 2 RR 25:4-7. If the machines made more than $45, 

Coinmach would get $45; then, Coinmach and Grayco would split the 

remaining gross receipts 50/50. 2 RR 19:2-13. But, of course, there was 

no guarantee the machines would make any revenue, let alone $45. 

 

5 As the Court can see, Coinmach averaged $36,828.38 during the first couple of 

years of the lease. See Ex. D-25. That average later declined for the reasons 

discussed above. 

6 In other words, Grayco would never have to come out of pocket to ensure 

Coinmach made $45 per machine, per month. 
30 

b. Coinmach’s alleged profits are too speculative. 

Coinmach’s corporate representative agreed that there were many 

months when none of the machines made $45.7 2 RR 25:11-23. Further 

Coinmach acknowledged that gross receipts had been declining since 

2006. 2 RR 19-21. Despite decreasing revenues, Coinmach asked the 

Court to speculate as to what the revenue would have been, using the 

assumptions that there would be tenants to use the laundry room and 

the tenants would, in fact, have used the laundry rooms but for Grayco’s 

decision to lease-down and then demolish Regatta. But a party may not 

recover damages for breach of contract if those damages are remote, 

contingent, speculative or conjectural. Southwest Battery Corp. v. 

Owen, 115 SW.2d 1097, 1099 (Tex. 1938); Pace Corp. v. Jackson, 248 

S.W.2d 340, 348 (Tex. 1955); City of Dallas v. Village of Forest Hills, 

L.P., Phase I, 931 S.W.2d 601, 605 (Tex. App.—Dallas 1996, no writ). 

Lost profits claimed as damages must be established to a reasonable 

certainty. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 

1992). 

 

7 Thus, Coinmach effectively paid no rent during those months. 
31 

Based on the unrefuted testimony from Mr. Britton, occupancy at 

Regatta was declining due to the terrible condition of the apartments. 2 

RR 90:21-25. The conditions—which were present before Grayco 

acquired the property—were such that vagrants had taken up residence 

there. 2 RR 98:4-7. Neither Coinmach nor the trial court had any 

reasonable basis to assume that there would have been tenants at 

Regatta, or that any tenants there would be willing and able to use the 

laundry machines through the expiration of the 2002 Lease. 

Therefore, Coinmach’s claim for damages fails for at least two 

reasons: (a) there were no provable damages suffered because Coinmach 

was not entitled to any specific amount of revenue or profits; and (b) 

any damages Coinmach claims are impermissibly speculative. 

Importantly, Coinmach’s failure to prove its damages extends to 

both its breach of contract claim and its breach of the covenant of quiet 

enjoyment claim. Even assuming that Grayco breached the covenant of 

quiet enjoyment, Coinmach suffered no damages for the same reasons 

that it suffered no damages from its breach of contract claim.8

 

8 In reality, Coinmach’s claim for breach of the covenant of quiet enjoyment is a 

breach of contract claim (which is how Coinmach pled it). CR 410, ¶ 3. Indeed, any 

implied covenant of quiet enjoyment was subsumed within the express terms of the 
32 

3. Coinmach’s damages calculations are legally and factually 

untenable. 

Coinmach’s sole evidence of damages is the testimony of its expert, 

John Kemmerer. The trial court erred by accepting Mr. Kemmerer’s 

contradictory, baseless, and assumption-filled testimony, as well as his 

hopelessly flawed damages calculations. When the assumptions on 

which an expert’s opinion is based conflicts with undisputed evidence, 

then the expert’s testimony lacks any probative value. City of Keller,

168 S.W.3d at 813.9 Because Mr. Kemmerer’s testimony was wholly 

based on unsupported assumptions—and because Coinmach offered no 

other evidence of damages—there is legally insufficient evidence to 

support the trial court’s damages award. 

a. Mr. Kemmerer incorrectly determined when damages 

began to accrue. 

Mr. Kemmerer incorrectly determined that Coinmach’s damages 

began to accrue in March 2006, more than a year before Grayco 

acquired Regatta and more than 18 months before Regatta was closed. 

 

2002 Lease. See, e.g., HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d 

326, 328 (Tex. App.—Houston [14th Dist.] 1990, writ denied). 

9 I.e., “garbage in, garbage out.” 
33 

The error of this assumption afflicts the entirety of Mr. Kemmerer’s 

calculations, and manifests itself in numerous ways. 

First, Mr. Kemmerer testified that the reason damages began to 

accrue in March 2006 is because Grayco indicated it intended to change 

the use of the property via email on March 7, 2006. 2 RR 53:21-54:8. 

The email was authored by an attorney named Bradley Jones and sent 

to Coinmach. 2 RR 53:21-54:1. Mr. Kemmerer admitted, however: 

 that the email does not mention Grayco; 

 that he did not know who Mr. Jones was; 

 that he did not know whether Mr. Jones worked for Grayco; 

and 

 that he did not know whether Mr. Jones was authorized by 

Grayco to communicate with Coinmach regarding changing 

the use of the Regatta. 

2 RR 54:3-20, 55:2-6. Further, Grayco’s corporate representative 

testified that Grayco did not hire Mr. Jones and was unaware on whose 

behalf Mr. Jones was acting when he communicated with Coinmach. 2 

RR 82:2-15. 

Second, Mr. Kemmerer incorrectly assumed that Grayco’s decision 

not to renew tenant leases, which he claimed started in March 2006, 

caused the decrease in income from the laundry room, and thus, 
34 

Coinmach’s damages. Ex. P-7, pg. 3. Mr. Kemmerer admitted, however, 

he did not review any information regarding how many tenant leases 

were renewed at the Regatta in March 2006, nor did he review the 

number of tenant leases that came up for renewal at the end of 

February 2006. 2 RR 47:8-20. Indeed, Mr. Kemmerer had no 

information regarding how many leases came up for renewal or were 

renewed at any time. 2 RR 47:8-20. 

In addition, Grayco did not even acquire Regatta until April 2007, 

more than a year after Mr. Kemmerer began attributing damages to it 

for breach. Ex. D-10. The undisputed testimony is that Grayco had 

absolutely no control over whether tenant leases were renewed prior to 

April 2007. 2 RR 81:11-82:1. Thus, Mr. Kemmerer’s “expert” opinion 

that lost profits beginning in March 2006 were attributable to Grayco is 

indefensible and mars his calculations and his credibility. 

Third, and perhaps most importantly, Mr. Kemmerer began 

calculating Coinmach’s damages before the date even Coinmach claims 

Grayco breached the 2002 Lease. Coinmach’s corporate representative 

testified that the alleged breach did not occur until October 31, 2007, 

after Grayco closed and demolished Regatta. 2 RR 32:23-25. Mr. 
35 

Kemmerer’s opinion, on the other hand, is inconsistent with Coinmach’s 

claims and Texas law. 

Actual damages must flow from the wrongful breach of a contract 

before they can be assessed against the offender, as compensation for 

the alleged wrong. Mathis v. Wherry, 45 S.W.2d 700, 701-02 (Tex. Civ. 

App.—Beaumont 1932, no writ). Indeed, to recover compensatory 

damages, the plaintiff must establish that it suffered some pecuniary 

loss as a result of the breach of the contract. Stewart v. Basey, 245 

S.W.2d 484, 486 (1952); Abraxas Petroleum Corp. v. Hornburg, 20 

S.W.3d 741, 758 (Tex. App.—El Paso 2000, no pet.). 

The evidence must show that the damages are the natural, 

probable, and foreseeable consequence of the defendant’s conduct. Mead 

v. Johnson Grp., Inc., 615 S.W.2d 685, 687 (Tex. 1981); Winograd v. 

Clear Lake City Water Auth., 811 S.W.2d 147, 156 (Tex. App.—Houston 

[1st Dist.] 1991, writ denied). The absence of this causal connection 

between the alleged breach and the alleged damages precludes 

recovery. Abraxas, 20 S.W.3d at 758; Nelson Cash Register, Inc. v. Data 

Terminal Sys., Inc., 671 S.W.2d 594, 600 (Tex. App.—San Antonio 1984, 

no writ). 
36 

Texas law precludes Coinmach from recovering damages from any 

reduction in laundry machine revenue prior to Grayco’s alleged breach. 

As a matter of law, Grayco could not have breached a contract to which 

it was not a party, and could not have caused Coinmach to suffer lost 

profits prior to Grayco’s acquisition of Regatta. Assuming those 

damages existed, they could not have flown from, or had any causal 

connection to, a breach that had yet to occur. The damages awarded in 

the judgment are unsustainable for this reason. (Mr. Kemmerer’s 

inexplicable decision to base his calculation on this flawed methodology 

also renders the entirety of his opinions unreliable.) 

In short, Coinmach failed to establish a causal link between the 

decline in revenues prior to Grayco’s acquisition of Regatta and 

Coinmach’s damages as a result of Grayco’s alleged breach. Thus, there 

was legally insufficient evidence supporting a damages award that 

included amounts incurred prior to October 31, 2007. Alternatively, the 

damages award is against the great weight and preponderance of the 

evidence, and must be reversed because it is factually insufficient. 
37 

b. Mr. Kemmerer incorrectly included reimbursement of 

the lease bonus/decoration allowance. 

Further, Mr. Kemmerer incorrectly included in his damages 

calculation an amount for reimbursement of the lease bonus/decoration 

allowance Coinmach paid to Bridge. Ex. P-7, pg. 3-4. Grayco was not a 

party to the Supplemental Agreement between Coinmach and Bridge 

whereby Coinmach agreed to pay Bridge $14,000 as a lease bonus 

decoration allowance. Ex. D-2, GP 000006. Coinmach’s corporate 

representative admitted that Coinmach did not pay the $14,000 lease 

bonus to Grayco and he was unaware as to whether Bridge paid any 

portion of the $14,000 to Grayco when Grayco acquired Regatta. 2 RR 

28:2-14. Grayco’s corporate representative confirmed that Bridge did 

not pay Grayco the lease bonus amount. 2 RR 87:7-21. Thus, there is 

legally insufficient (or, alternatively, factually insufficient) evidence to 

support a damages award that includes a reimbursement of the $14,000 

lease bonus amount. 

c. Mr. Kemmerer’s daily average collection determination 

was arbitrary. 

To calculate the damages Coinmach allegedly suffered, Mr. 

Kemmerer used a daily collection rate of $99.81. Ex. P-7, pg. 4. Mr. 
38 

Kemmerer explained that $99.81 represented the daily average 

collections from December 22, 2004 (the first date available) through 

March 1, 2006, the date Mr. Kemmerer alleged Grayco changed the use. 

Ex. P-7, pg. 4. However, as discussed above, Grayco could not have 

changed the use of the Regatta in March 2006 because it did not own or 

control Regatta at that time. 2 RR 81:20-82:1. Thus, the collection rate 

used by Mr. Kemmerer is arbitrary, baseless, and only serves to 

impermissibly inflate the damages calculation.10 

Because there is no competent evidence to support the amount of 

damages suffered by Coinmach, the trial court erred in awarding 

damages based on Mr. Kemmerer’s calculations. 

 

10 Mr. Kemmerer took his arbitrary $99.81 daily average collection and extended it 

through the term of the 2002 Lease to arrive at his ultimate damages number, 

which was accepted by the trial court. Coinmach utterly failed to provide the trial 

court with a defensible daily average supported by the evidence (or Texas law). 
39 

PRAYER 

The judgment should be reversed and rendered. Alternatively, the 

judgment should be reversed and remanded for a new trial on damages. 

Respectfully submitted, 

DOBROWSKI, LARKIN & JOHNSON LLP 

By:/s/ Cody W. Stafford

Frederick T. Johnson 

SBN 00785429 

Cody W. Stafford 

SBN 24068238 

Akilah F. Craig 

SBN 24076194 

4601 Washington Ave, Suite 300 

Houston, Texas 77007 

713.659.2900 – Telephone 

713.659.2908 – Facsimile 

COUNSEL FOR APPELLANT GRAYCO 

TOWN LAKE INVESTMENT 2007, LP 

CERTIFICATE OF COMPLIANCE 

I hereby certify that the computer program used to prepare the 

foregoing Brief of Appellant shows that 7,070 words are in the Brief of 

Appellant. This word count does not include those words that TEX. R.

APP. P. 9.4(i)(1) excludes from such word count. I further certify that 

the Brief of Appellant was prepared using l4-point font with footnotes 

typed in l2-point font. 

/s/ Cody W. Stafford 

Cody W. Stafford 
40 

CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of Brief of Appellant 

Grayco Town Lake Investment 2007, LP has been served on this 6th 

day of May, 2015 as follows: 

VIA CERTIFIED MAIL RETURN RECEIPT REQUEST

AND E-FILING

R. Kemp Kasling 

Kasling, Hemphill, Dolezal & Atwell, L.L.P. 

301 Congress Avenue, Suite 300 

Austin, TX 78701 

J. Bruce Bennett 

Cardwell, Hart & Bennett, LLP 

807 Brazos, Suite 1001 

Austin, Texas 78701 

/s/ Cody W. Stafford

Cody W. Stafford 
APPELLANT’S APPENDIX 

1992 Lease (Ex. D-1) ........................................................................... Tab A 

2002 Lease (Ex. D-2) ........................................................................... Tab B 

April 22, 2002 Memorandum of Lease (Ex. D-4) ............................... Tab C 

Assignment and Assumption of Leases and Service Contract 

(Ex. D-13) ............................................................................................ Tab D 

Final Judgment signed November 6, 2014 (CR 484-86) ................... Tab E 

Grayco’s Motion for New Trial (CR 489-99) ...................................... Tab F 
TAB A 
DEFENDANT EXHIBIT 
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/':" ., ~,~022551 FILHCOOf -+t/~r 

.:::::COIft'RAC'p~~~FOR~S=ERV=I:.:::CS:::S~A.~RD=-.!:L:.=EA:.:::S:.:e....:A:::C::!!R~==tI D 0 O~ SO 464 s 

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. ?td, contract:' :j\M ~"AsP:'a_ent: ill '.ado ·t:1Us // ".~ Of 

~~_ • 199:1 by' and, between Do N0.r6a construction Co. ('5Wnar) ~II pri1'\Cipa1 o!li.ae .1~ l~atoc1 at; %23 A:vi,,,t:lon, in th4 CJ,.ty of Fall-brook, 

Cpl.ltoTl'11.&, herfUll rofCCX'o<I to liS l.BSSOR. and MoNALR' S CODt LAUNDRY.co. o~ 

lIusti.n. TIIIXaIl. bGta:Ln refsrred. to .. I.ESSSS. for the purpose of estiIbll!llU.ng 

agd q:lPt:a:l.:D!ng ccrln-l.~ room. f'ac.iliti_ at 1f1c.dja..er .Apa.rt..atrts, 1201 

'!'oWn ~oot. AuJOt1,a. ~, horoiQ re~e:r;red to all 'l'HB PROJEC'l'. 

j;a!1Ji. ot LaundJy llooiIL! LESSOR 4Jaa hereby base to LRSSBl!: all. present end 

IIWn, lcundr3( :roqII ~oea loaa~ on or .. t the project (trMch er, 

COl.iect1.vel!, X'Q{errw to lUI thGl -l.cailSCc! pr8lda&S-) IIXld Vh1(Jb are located in 

~ rea.l. PJ:o~l."tr ~~ 'O<Uow. for the teXJII and on the oondit.f.0Q8 stated 

balOW and QJI \;he revc.£" aU. b8rao.£. for the fol.lowing conaJ.daration! .' .. -... ,.~ , .. - - . . . 

Ca) '-'he iMeellllUon. mil .Dlnt~. by Lnse.E o~ the 'louoving 

.' coin-lal.la&:l" e'i(u:l:pIaent ("I:be~t·) and :lm~_nw to the leaficld 

'~c;: ;' '. ",;< fM IIIX , l:,U 1'1' 1215 I 1 UJtDm 

1:& - ~ Ma,yteg. V.a~ t" • " 'l. ... is - 'J\IIa23,~ -'~a.g Dryers , '. 3:23:" ~ , 1. 1 -1J3lW:J2 

(bL,~ c;ol).~a ~t by br., 

USS2l. 

t.KS$B2-:0.f ~ i;tI.wash8ra nf'ty percemt 

'IInil 

(5Ot""o.f 

dryQrs Ulataqaci 

~e groa.e. by ~. ~. 

. ';1itt9- tbe i'rojOQt, to be ~d mO~th~y. . 

fbR ,de$o.r19~ o£ the' ree1 prOpei:tjr upon. whlch tbo Proj &Ci; ;La located 1.5: . I 

,~ f1v. (S) thro\l9h ~~t (8}' .1Gcl.U$.:1.ve, Bloat c, ~1I1te . ,l,aZa.. a~iJb&..,.~ Ul 'l'ra.V1.lJ COUnty, faqs. l.Gc~~).t" ~. aC "f4a.' .,,~j~ A~t:v. nOl '1'otm 

.: t::l:r4~, . Au~ 'f:effl~ CWl:.tY. 'J'exas 

~ 

L£.6~. ~l ~ 'the dgllt oJ! J;ngriSnJ and j!I~1I to .nd ~ tho 

prlllil:l.~ aftc1 ~III be) , ~ Prpj~t q is noolUf~q to install, 

ce~~ ~ ~;~~i1 ~~~i$.t ~1ed 'by' Llt~B and 1:0 eou.~ ~~ t1J8m£rma. 1iQ4' t.USli! 'iibll.l be eiltitJ.ed 'to the gUiol: enj0:idllant to 

t::he 'i~ ~._ ~ 1;:iw' tIIm-1uaraoE ~ eny renow.l ho~l. 

~ PbXtillla. h~ a~8 thet:: ~. Contract and Lease I\greemsmt 1. 

",!b,:f;~. ~ aU cd. the tanaII ami c:onditionll on ~ i:e~ d.Oo twnot; '~~~t CCampanTCa. the elIIM.ay b$) WOCTut. t~t ;Lt; MIs the ftlu ~:t:J< ~ l'l!iJb1;, to R;Oter Ulto th;ta agtilllUWnt aild lease aa ev1d&bC&d by 

Us s1:gnatui-c btU.OW'. 

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( ) ~b.it A - D£il1t:Ln9 ot! LoM~~~1t~·.;;;eC;::·:;:·,,:.:e:.:s:...-.~~~, (~) • .P.~.t9~ CodL!l~', D.UlIt~ . anoe ~eaent '. bII!r~~"lIM 

~I'MPUTT liED!lftllS ..... ns COIIlITY. T£X.U 

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EXHIBIT 

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EXCLUSXYB !lI~:, (.eBsor hereby 9rontB to McNAll!. I S COIN LAtJJmItY CO., ~iJliilt&r ral~ed to as LaSS_,' en o101USlve 1.ea1l8 to tb4 loaaed 

~8. aDd the .,.cl\U1tve right: w ope.nte D%ll1 pravJ..do, loundr,i aqu1.~tmt 

and serviclOS to ?:be l'rojeot. (1nolwJiJlg to the exelus~on of LUsor 

.insteu.~ equ.1p111ent - in :i:.ndiT1dua,1 apartmenta). My _anibnen.t to this ~t: CIIU$t'ba:in wrltLng IIln4 eigne!! by ~ part:i.es. kn_ ahol.l I:lavs 

tha SOla rtgnt: tQ $$t the priOa for tho \lS8o 01 the co':tn-laUO\trY oqUipMnt, 

but: ouobprieo :mall. ~_ya be ~ .. Utl.ly r~ab1.e_ J.aasl".'8 .xel.uSJ.VCl 

leUe shall bs irubj60t t:o thu Wl8 by r.aslo'IQr'. teI\QI').t •• their :l.nTi~.1J e.nd 

.;,u.n., .,d ~89 ~ Le:soor. . " 

~ ~~CS OB~GiI\TIOBS: Le-.- ,wnl .iroJtall. aerv:t.eo and ...untun tne, 

oqiripillent ~ p-.r:I!'OJ:'Jl auoh ~6r:vl~va as :stated :l.n tldlJ COO\;:root an4 Lease 

~t. ~_.t.11:3 expense at\a.u. ma1.n"te.1.n. the itqUi~lIUII1t in pood 

rep.e.ir and wurldng can¢!. tlon at au tilltas. ' .... ~,' 1:_l't" ........ _, .~....... ' ," 

~IP OP ~: A:ll. eq"iPJlllent.' :fJ.x1;Uro. 800 tunuslUnga ±nnall,e~ bY. ~e l:IIlual.~utolY :remain the proparty of l.e1OBee.. .Lessor $ball 

take Pruesul;JDri5 to protoct r..ssoo·Q :prOP'l1;ty :fl:Oa ~~. pJ.l.£era9c and 

haria o~__ ~ flOrJlIa1 woar lind 'tear .nd .,.111 p~t l.tt~ "!:ri J;_VO -th. ~t «ma. :f1l~9'U upon tUlJ.lnat1~ of ttue, had or any ~tlD9W41, 

Ile%'cof. . 

~.: Lea~ w.f.l.l ~tI!1n the laUnclrY r~ in ~o(I.~r~d 11\. 

Clftrl ·aaa _1~ ~~ fi:Ae .. end ~l.ear o~ all tr~ ~ :r1S~~. 

!i!P'PXSS: '~or $hall at ~ts a~_ ~$h uttl.i:t;lCis ill' '1;bo 14:aHd p~ 1nC;J.udJ.ng ~B~~ ao4 siuU.i~1e1\i; ·~t ancvor ,air eOaaitiiabing • .n~; dtalnaga anl!el~1cf.tY tOl" a u.imary xOCU. 

'P~1fBl; l"Ofotcns: -Ui, parllQDDal: -.poy~ ~ ~lJseo ~ell. at,a+;t ~ be 

,~,: :,*,,~~;~. ~~.4~~'r.~ ~~ ~i.va~~~~$=, 15.' .~ ~r1y erad ~t'.t.G:t.ent 'c;ondut;rt O;f !Ill ilct:LV1UU on ~~'e prCnljes. 

r~Ji~tb.e ~ of' ~ l~, r.~e ~. ~diI,~k~ in 

Mju~ 

~rt~.~~ l!irl~. ~ ±ft.~.q.pe-~~;aJ. ~D. u!!~~~f~~~ ~e .o~l no" =~~~ be l:1Alilei·1:o Lessor .i;,!!-';~ -.. ~' .. ~ ~ to the loaee<i ~~ U1c:;l.~ ~ to tho l:~~ prJIIa~ X1tSJtl~ ~ water. nrXXU.ng. ~~1\.t U1Z pl~ 

'hf'~ii? ~~:~~ ~~.~. ' . , . .' 

-~. ii:s!i19ri1 lIPb,loaGa a.t' 

:.tn PIIrl' ~ -PT n(>t 

Of ~~. ~:w;-,.\JOb 

tdtbbald. ~ ~'sholl 

'. '. ~~t~ UpOn. ~ ~VWli41;f.b:ll ~ 

~~l;"~=a :~~~!11;~~: . ~ ''''':~ .', ,tfi.tr~or~· ;bshS·· '.iino ..... ,~, .. ' .,' .. ' 

,~~ of· ,fo-.or'" b~. loaolY~~ or ag)\~t. ~Bs.e!l ~~.:6'fl :~ts! ~lvn" tue ~fi.08b.i!Jl.Q~"" ,lilt ~M'"\IJ:IoO~~ 

..... ~":(of:~d"~ .~~~ w-1.1:bP\.I;t. 1tUb~~:1tT of ~,~"tf. ~ c)(" ~nr 

., 1I.im. IBR6! . %, - 'rlIw,: . Btid:tee' til. :,.' . , ~·en ~ Hit· "tih.,~, it 'h.~ ~.nh;t,gi:n ~:fpr. ~', •. , 0:): '~::.a.l =,~.~K...-;~ 're!iIt:iot- 'a ·mr~ ~~~i ~ '~' 'iJ;~~!;ln "~' .,,~. '0. e~'~ bY . ~O~ ~=Oli 'tb~l-.dll .a:d '004~t 'jiij tie' 

option, f'ar unpro:f.1"ti1ilWtY.by giviAg suty' 

'1;0 Lessor. ..' -

,liUlnOPatlnEOOJIPS TllAWUOUJrfY. mu 

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TAB B 
DEFENDANT EXHIBIT 
From:COINMACH SAN ANTONIO 

STATE OF TEXAS 

COUNTY OF TRAVIS 

210 697 8368 

COIN"MACH COltPollATION 

I...MSE AGJmEMENT 

08/04/2008 15:16 #176 P.003/014 

DATE; J'anllltt}' 30. 2002 

WCATION U-6293 

M.ema!.1rOOWi of agreement ~Em COJNMACH CORPORATION~ bereirurller ca11cci'I.ESSEB. and ijrldge Management CJ!., 

OwnerIar acting with full authority Iijl owners agent, hereinafter ca.Iled LESSOR of the property cansistJng of (lU) Ap!ll'fmen.t . 

Units ]ocate4 at the 1I.ti.dres.s ~only .k:no\V1\ as .1iMI¢!a . A(:lar!mentlI, located I l~Ol Town Cre"k Drive • ..A.u!titL ~ 

1mL. 

1. J'...'llSSOR herewith leues unto LESSEE. IIm1 LESSEE hereby rents fh:Jm LESSOR. the Iaundry room(li) on 

the premises qel!c:ribed «bove com.mCll~ tlIl·da~ of Lease and ~g 1m (ll!) years after LeIU!e 

Agreement. il 8i~ 

2, LESSEE sluill. be entitled to tbt: right of exclusive _llatiott Itt1d opemti.o.n of the equipment nil the fllxr1e 

described premises far which LESSEE shall pay 10 LESSOR a rentt.l.l of ~ ~ %) percent of tilt:! srosB 

receipts, 't:bI!I 1linta1 will be paid In(mthl;y by check to LeMar,. provided bowev~. that the le8sec aha:ij 

e1WByt be entitled to receive flS minimum compensa:ti.an $45.00 P(II.' macll.Ine. pt;:r month. DedootiObj;l from. 

1h<= IIIlttl to ~ paid LruiSOR &ba.Il mcl.1Jdc, if imd vrll.en applicable, any lllIl.IIicipal or state license fm Md 

I,lilcupatiorud, salOl!, use rental, personal ~ or fi:tmol.tise ~ and refunds to U9fi. . 

3. LESSOR ,ball. at its OWA ~e, provide IIl'I.d rtuuntain 1111 necessary electric, gas, water, ~ IIlld 1111 

other facllitios required to properly ~ the equip.tnOfit, Including utility CO,IitieI:lljone. LESSOR shall 

clean lIIla maintain the pt'(lttIlsei lind promptly DQtify LBSSlill if end When the equi~t OMseli to operate 

In a normal. 111rult'IeI:'. LESSEE, sholl own and maintain tl1e ~quipment that it inJIUdb, without exponal.l to 

LESSOR. 

4. LESSOR agrees t() provide w.fficient me laundry rootn(e)with adequate lIPI.tOO, 'Which will allow the 

LESSEE to install an /ltkIqt.mte tlltlOunt ofWUliher(s) and. dryar(*). In the event LEsSOR request/!, in wrltlng, 

tho ~em.mt of fifty p~ or MQt¢ of LESSEE' Ii lllUlldty equipment during thetenn Of th.ill Leru!e with 

new machines. the U!:8SE'E ma:,r. upon reeai.pt of said writtetll\4ti¢e and. replace.tne!l.t of the laundty 

equipment. axteru1 the original term Ilf fhiB Le~ fbt a period. of five (5) yem. All additir.uuil renewal 

terms lIhall then be: onlIJ.rsed to ~ the ~ origirud term. LESSEE ~ the right to install 

other vend.h1s equip.ment in.tl'Ic pratni~$ and to e.ffi.x ~ble IIj~1I or other notices to tl!e walls and eqw~ . 

5. LESSEE shall maintain It reasonable amount of CQmp.rehen&ive gentlt'~ liability and ptopM:y dam. 

fnsurltll,Ce. 

6. LESStm Bballlmve eKciu!!iw 8.tld quiet uac, posseaainn and enjo}'ll*)t oftbe premise! ~ed herein during 

tl\c L~ te.nn. 

" This Letll'!e IiliIIll be automatlcelly ren.evved for succesllive periOds !:if time ll1l1e$s CWlCeled in wri~ by ~ed or re~d mail by Gither party at 1eut oo~ year prior to its ~riltion. 

EXHIBIT 

GP 000004 
From:GOINMACH SAN ANTONIO 210 697 8368 08/04/2008 15:16 #176 P.004/014 ,~ .. ____ ._ •• __ n ........... _. "' •• -. •• __ ~--;--_& , ......... ': 

8. LESSOR imd. LESSEE agrell that ill CODiidera.~ of' 1ful provisions of this ~ Lease Agreement. 

LESSEE shaU be entitled to the right of exclusive installations and rental of any tlOn~ laundry 

equipmw in ctu: apartment units on the above dcsoribed premises. . 1'hia in8tWliltion and:retltlU IIhaU either 

be where LESSES leuell the laundry equipment to the owill'mlloWllell:S ~ or wh~ LESSEE leaaelJ 

directly'to the rosident. 

9. LESSEE ahall have the right to terminate this Lwe. upau w.ritt.tm ntrtire to LESSOR, if (a) y!lllrllllism, 

theft. Ill' attempted thaft at tbe premllleS ~ eooleSsive lIO as to seriously ~ LESSEE'S ability t,o 

pll1fOm1 under the Lease, CIt (b) WJaSC of the equipment in any three (3) ~ve months does not ~ed 

an average aU QYCiclrper ~ per day. 

10. CQINMACa CORPORATION. or illl assignee!!, is horeby g1'VC1l1l right offirst rofusal to CIlOtinue providinB 

lllUll(lry service to the pt'e!JlWCII upon the expiration Of termination of '!bill Lealie for. any realIQn, LESSOR 

IIhAll not IMtle the premises to a LHSSER other than C~c:h Corporation unles!J (1) LESSOR h.as first 

provided CoimnaOh Corporation with a. ~py tiC the dreCUtCd prtlpO&ed lease containing bont'tfide termJi of 

t1)e o1fer beinS no ll!ll!l$ thpn five ycam. and (2) within thirty .(30) dttys Bfter Coin:tnrlclt Corpomtion flCltua1 

.receipt I,lf a copy ()(' tha pro}Xlaed lealfe, co.irunach lAporation hal flliled to notifY LESSOR of Coimnacl1 

~ 

Cor,porationll' ·agreement to .InIl.tth !W:lb offer. If Coininac;h Corpo:ratlO1l does liO notifY L'ESSOR of its 

to matcb.1l1lrJl otrer within such t4irty (30) day peci(xJ. LESSOR. Bgrees to lease the l'J.'C1lliae& to 

Cointruu::h COIpOftltion mbjed. to the tertn. ottllf:l PfQPOIed lwe. 

11. tBBSOR shall :infotm allsublJequent OWllI!:r:ll of the ~ of the rights ofLE8SBE under this Lease, 

12. In tho cft1lt Iitly aation is bW:itnted to enforce any provisfon of the Loose. the pmvtilli:ui party shall ba 

entitled to 1"5llOllllble attorney fees, court cost and ~8. 

13. 'l'1tiJJ Lease sha.ll be binding on the. partieJ hereto, theit bein, executors, IIIlCCes3Olll, !Slip and personal 

~~. 

14. LESSOR and LESSEE lI.Ckno'wledge tlud this I..eaee A&recme.nt ilan ~on. ~1, and ml',)dificati.tm. 

of that certain Lea8$ A.g:reemerrt dated Mareh 1.1. 129.2 between u.e @r4s Conm;w,:tion Co" LESSO:R" 

and ~!!jrtICOinI.an!l4!:lCo, • LESSEE. n is acknowledged that BridgQ Manaaement Co. has 

8W.lee&id in fttt.erest ItS r..ESSOR, IIlld Q9inmach CUJ1lQ!J!tion has II1lCCeOOOO in int~ /lS LESSEE, 

U. A labor duq.e of S% of OrosI! Receipt(l will be deducted from LESSOR'S SUM if OO11t1tifig Qt1. site is 

l'«J.Uired. 

i Lessor is: __ Individtutl ~ertnershi:p _ Corporlrtion 

Enter Social Seourlty number or the FedenIl ldentificatkm u1.lmber in the appropriate space. 

S0C1AL8ECUlUTY# ___ - ___ _ 

'f FEDERAL I.D. # t3 7 -C!)'" '2. t.. l.t. 'Z.. 

67 . cP (.". "2.1!.. £ 'Z. "Z... 

LESSOR 

BJUDGE MANAGEMIU'ff co. 

1"7&_ ~~ :-,. fBY~i~ 

'rDATB: 7 .. ZO·oL 

COMMl8SJOl:'iS TO BB SENT TO: 

APARTMENTS ~ OWNImlAGENl' __ 

LIlSSEII: cOlN>W!Hg0N" 

BynIlAu~~S~ 

DATE: _ ~ ... 4.1 .. 62 
From:COINMACH SAN ANTONIO 

LQCAnON i#J-6293 

210 697 8368 

COINMACH CORPORATION 

S1JPPLEMENTAL AGImEMENT 

08/04/2008 15:16 #176 P.005/014 

A one time Leaso BonuS/Decoratlon A~lowance ofFQllrteen Thousand M4 noIIOO ($14.000,00) 

Dollars will be made payable to Bridge M!nft~t Co. within forty~fivc (4S) days after the iusta11!lti()tl 

of the equipment. Apceptancc and dtposit of the check for this amount is aoknow1edgment of recoipt of 

payment This Lease covors aU coin operated laundry space in the multi .. :fiunlly COttmluniq known as 

. ~ ApartmentB. LESSOlt, Bridge Management CQ. is owner or acting with fUll authority llS 

owner's agent of this pl'Qp«ty. 

LESSOR warrants that the unearned pi:Qrate share of the lease bonusIdccotation allowance will 

be ~ to LESSEE if LESSEE, for any reMOO sbaWd be req~d to remove its laundry equipment 

£rom these premises prior to the expimtion of the original tean of the Lease. The Originall:..ease wat for a 

period of 120 ttlOn.ths. Its monthly value is $116.ti7 fo~ pro-ration determination. AlsQ. in the event 

LESSOR insWled, or causes f.Q be installed. during the temr. of this Lease. WQbers and/or dtyc:rB in the 

units tlurt are the snbject of this Lease; LESSOR win llotify LESSEE of such lnBtalIation and return to the 

LESSEE the unearned pro-..ra.ta portion of the lease bonus/decoration allowance. The following formula 

will apply! (Number of units where washers and/or dtye.rB have been installed, divided by the total 

ntllnber of lUIits) multiplied by (the number of years remfti'Qing on the Lease,. divided by the toUd years of 

the subject Lease) 1lIUltipliod by (t:be original lease bonus/decora.tion allowance) equals t]:u, amount of 

money to be refunded by the LESSOR. The fonnU.1a for pro tata determination delineated herein relates 

only to calculating pro rata rcrtum of the leaso bonusl4e«lration alloWlUttle paid to LESSOR by LESSEE. 

Nothing stated herein aIf.ects in any WIlY LESSEE'S tight to receive oompensation for lost b:I.coine in the 

O'\"Ont of LESSOR' ~ breach of the leslie agreement 

LESSEE; 

GP 000006 
TAB C 
DEFENDANT EXHIBIT 
COJNMACH CORPORATION 

Memorandum of Lease 

DATE April 22,2002 

STATE OF TEXAS 

COUNTY 0'F'TiAVIs 

TbJs ll1SU'UfDent Mil CVldence and when ro::orded serve BRIDGE MANAGEMENT CO, owner« Ilctmg 

With full authOf'll)' as owners agent. hctemsAer called LESSOR oflbe pre:ml3CS commonly kAowD a.<-

REGEn A APTS_.I~M:d at 1201 TOWN CREEK DR., AUSTIN, TX 7JlU 

,. Lessor and COINNACij CORPORATION, u Le:!sce did a.ecotc II Wl"1ttI2t Lease Agreement of real 

esI:.ak v.fuch )X'OVJdes m part that dunng the penod therem. set Iiiih> t:CiieC Jli$ tbC ngbt to oocupy the rea) 

estate on Willdl all laundry rooms lICe IX" WIn be SJtuated OD. the land and ~ named above tlIldc:r: the 

!emu and coodItJons of said lease 

CopIeS of saW Lease: (whJcb IS meorporated herem by rdi:n:nce) ~ 011 filo at the lespedJVC offices of 

Lessee and Lcssoc 

ZL ~3. 

Ex=odth./J 

Before me the anderstgnai 

"".f ~ 

IIllthonty on 

100\ 

thIS day 

~ 

personally appeared Mth We!Itq. &gloom Vu% 

Presldenl of COlnmach Corporation. known to me to be the pc:rsoo whose llIIme lS suI:=nbc:d to the 

fore&omg .l1I.StriJmcDt and ac:Ialawlc:dged to me that be a.CCI.Iled the same fur the purposes and eonsidemllXl 

therelll expressed 4L Ql<'i::)3,. 

ONeIl und~ my band and $Cal Ous I (f day of ~ -2M-

·~~s2~-£2<' Izn& Jean TiemaJ6 

Notary Public State ofTc:x:as 

My CamlllS9l!lIl ExpIres August 7, 2004 

RETURN TO: 

COlNMACH CORl"ORATION 

3S6} Dime Circle Swte 101 

Aostin. Tens 787«-2300 

FILED AND RECORDED 

DFF1CIAL PlJll.re RECORDS 

e3-25-Z8al 12 If,7 Pn ZH306!!e71 

~$9" DAHl! Da[AlJ'lOtR • COUNTY CLERK: 

TRAVIS CO\JNTY. TElCAS 

,scription, :n-av:i.8',:r.r 99-PrtlSellt l'6£r.DocXD 2003.65071 PAge: 1 of 1 

~~: V8775 COJ:I!mellt: . 

lOt 

EXHIBIT 
TAB D 
DEFENDANT EXHIBIT 
Assignment and Assnmption of Leases and Service Contracts 

Date: dAyl5 ,2007 

Assignor: FOLEY CAPITAL ASSET, LLC, a California limited liability company 

Assignor's Mailing Address: 6103 Avenida Picachot Rancho Santa Fe, San Diego County, 

California 92067 

Assignee: GRA YCO TOWN LAKE INVESTMENT 2007 LP. a Texas limited partnership 

Assignee's Mailing Address: 55 Waugh Drive, Suite 500, Houston. Harris County. Texas 77007 

Property (including any improvements): The real property more particularly described on 

Exhibit "A" attached hereto. 

Leases: All residential leases to or on the Property. 

Service Contracts.: The contracts relating to the Property set forth on Exhibit "B" attached 

hereto. 

Consideration: TEN DOLLARS (SI0.00) and other good and valuable consideration. the 

receipt and sufficiency of which are hereby acknowledged. 

Assignor is conveying the Property to Assignee by warranty deed dated this date. 

Assignor, for the consideration and subject to the Reservations :from the Conveyance and 

the Exceptions to Conveyance and Warranty in the warranty deed. to the extent they affect the 

Leases, assigns to Assignee all of Assignor's right, title. and interest in and to the Leases and the 

Service Contracts. Assignor binds Assignor and Assignor's heirs and successors to warrant and 

forever defend all and singular the Leases and the Service Contracts to Assignee and Assignee's 

heirs. successors, and assigns against every person whomsoever lawfully claiming or to claim the 

same or any part thereof, except as to the Reservations from Conveyance and the Exceptions to 

Conveyance and Warranty in the warranty deed, to the extent they affect the Leases and the 

Service Contracts. 

Assignee assumes and agrees to perform the landlord's obligations under the Leases and 

the owner's obligations under the Service Contracts arising after this date. The obligation to repay 

security and prepaid rental deposits to tenants under the Leases is limited to the amount of cash 

delivered or credited by Assignor to Assignee with respect to security and prepaid rental deposits. 

Assignee will indemnifY> defend, and hold Assignor harmless from any loss, attorney's fees, 

expenses, or claims arising out of or related to Assignee's failure to penorm any of the 

47.24S2Ov.21301691OOOO2 

EXHIBIT 

GP 000060 
obligations of the landlord under the Leases or the obligations of the owner under the Service 

Contracts after this date. 

Assignor will indemnifY. defend, and hold Assignee harmless from any loss, attorney's 

fees, expenses, or claims arising out or related to Assignor's failure to perform any of the 

obligations of the landlord under the Leases or the obligations of the owner under the Service 

Contracts before this date. 

When the context requires, singular nouns and pronouns include the plural. 

472452Ov.2130169100002 

ASSIGNOR: 

FOLEY CAPITAL ASSET. LLC, a 

California limited liability company 

[Signatures Continue on the Following Page] 

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GP 000061 
4724520v.2130169/oo002 

ASSIGNEE: 

GRA YCO TOWN LAKE INVESTMENT 2007 LP, 

a Delaware limited parlnen;hip 

By: Grayco Project Town Lake GP LLC, its 

general partner 

By: Grayco Partners, LLC, its sole 

member 

[End ofSignaturesJ 

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GP 000062 
Exhibit "A" 

(Legal Description) 

TRACT 1: Lot 4, Block "c" of Resubdivision of Lots 1,2,3 and 4, Block "C", TOWNLAKE 

PLAZA, a subdivision in Travis County. Texas. according to the map or plat thereof, recorded in 

Volume 49, Page 56 of the Plat Records of Travis County, Texas. 

TRACT 2: Lots 5, 6, 7 and 8, Block .. C·., of TOWNLAKE PLAZA, a subdivision in Travis 

County, Texas. according to the map or plat thereof: recorded in Volume 18, Page 38 of the Plat 

Records of Travis County, Texas. 

A-I 

472452Ov.21301691OO002 

GP 000063 
Exhibit "B" 

(Service Contracts) 

1. Gas Transportation Agreement dated February 19. 2003, with Texas Gas Service 

. Company 

2. Vending Agreement dated January 8, 2003, with Vending Solutions, L.L.C. 

3. Communications Services Agreement dated May 15,2001, with Grande Communications 

Networks, Inc. 

4. Contract for Services and Lease Agreement dated March II, 1992, with Coinmach 

Cotporafun (as successor-:in-interest ofMcNajr's Coin Laundry Co.) 

5. Service Agreement dated March 28, 2002, with waste Management of Texas, Inc. 

6. Ad Insertion Contract dated September 30, 2004, with Apartments for Rent 

A-I 

472452Qv.2130169100002 

GP 000064 
TAB E 
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CAUSE NO. C-I-CV-08-009655 

COINMACH, CORPORATION 

Plaintiff 

v. 

GRAYCO TOWN LAKE 

INVESTMENT 2007 LP 

Defendant 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

IN THE COUNTY COURT 

. CAME ON the 20th of August, 2014, the above entitled and numbered cause 

wherein Coinmach Corporation ("Coinmach'j is the Plaintiff and GrayeD Town Lake 

Investment 2007, LP ("Grayeo") is the Defendant. The parties appeared by and through their 

attorneys of record and announced ready to proceed. . 

All matters in controversy, both legal and factual, were submitted to the Court for its 

determination. The Court, having heard the evidence, including testimony and exhibits 

admitted into the record, and considering the arguments of counsel, has announced its 

decision in favor of the Plaintiff Coinmach. The Court hereby renders judgment in favor of 

Plaintiff Comach. 

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that Coinmach 

have and recover damages from Defendant Grayco in the sum of $67,122.]9, plus 

prejudgment interest in the amount of $19,695.31. 

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that Coinmach 

have and recover from Defendant Grayco its reasonable and necessary legal fees, which the 

Court finds to be the sum of $44,005.14 through the trial of this matter, including 

conditional awards of $2,500.00 in the event that Defendant Grayco files an unsuccessful 

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Motion for New Trial, and $5,000.00 in the event Defendant fIles an unsuccessful appeal to 

the Court of Appeals, and $5,000.00 in the event Defendant files an unsuccessful appeal or 

petition for review to the Texas Supreme Court. 

All costs are taxed against Defendant Grayco. All amounts ~warded herein and 

unpaid shall bear interest at the rate of 5% per annum from the date of this judgment until 

paid. This is a final judgment. All writs and process may issue to enforce same as allowed 

under Texas law. 

IT IS SO ORDERED ON TmS ~ DAY OF NOVEMBER, 20 

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Agreed as to form and substance: 

KASLING, HEMPHILL, DOLEZAL 

& ATWELL, L.L.P. 

301 Congress Avenue, Suite 300 

Austin, Texas 78701 

Telephone: (512) 472-6800 

Telecopier: (512) 472-6823 

Br. R. k~i;f k=.A~ R.KempKasl' 

State Bar No. 11104800 

ATTORNEYSFORPL~F 

Agreed as to form only; 

DOBROWSKI, LARKIN & JOHNSON, L.L.P. 

4601 Washington Street, suite 300 

Houston, Texas 77007 

Phone: (713) 659-2900 

Fax (713) 659- 8 

By: ---+-J,--*,~~------- F eri Johnson 

te ar No. 00785429 

Cody W. Stafford 

State Bar No. 24068238 

Akilah F. Craig 

State Bar No. 24076194 

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TAB F 
• • 

CAUSE NO C-I-CV-08-09655 

Filed: 12/8/20143:36:42 PM 

Dana DeBeauvoir 

Travis County Clerk 

C-1-CV-08-009655 

Andrea Scott 

COINMACH CORPORATION § 

§ 

§ 

§ 

§ 

§ 

IN THE COUNTY COURT 

Plaintiff 

v. 

GRAYCO TOWN 

INVESTMENT 2007 LP 

Defendant 

LAKE § 

§ 

§ 

§ 

AT LAW, NUMBER 1 

TRAVIS COUNTY, TEXAS 

DEFENDANT'S MOTION FOR NEW TRIAL 

Defendant Grayco Town Lake Investment 2007 LP ("Town Lake"), requests 

the Court set aside the judgment in favor of Plaintiff Coinmach Corporation 

("Coinmach"), and grant a new trial because-among other things-Town Lake did 

not breach the 2002 Lease. 

I. INTRODUCTION 

1. This motion is filed within 30 days of the judgment in accordance with 

Rule 329b of the Texas Rules of Civil Procedure. 

2. The Court signed the judgment against Town Lake on November 6, 

2014. The judgment awards Coinmach $67,122.19 in actual damages and 

$19,695.31 in attorneys' fees based on the Court's determination that Town Lake 

breached the 2002 Lease. 

3. The evidence admitted at trial, however, does not support the 

judgment; thus, the Court should order a new trial. 

Case # C-1-CV-08-009655 

'-'IIIIJ ""' JIIII 11111 11111 111111111111111 11111 11111111 
• • 

II. ARGUMENT AND AUTHORITIES 

4. To recover on a claim for breach of contract, Coinmach must prove (1) 

that the defendant was a party to the contract, (2) that the defendant failed to 

perform a material obligation of the contract, (3) that the plaintiff performed or 

tendered performance (4) that the plaintiff was damaged as a result of the 

breach. New York Life Ins. Co. v. Miller, 114 S.W.3d 114, 121 (Tex. App.-

Austin 2003, no pet.). Here, Plaintiff admitted no competent evidence sufficient 

to support a finding on three of these elements. Alternatively, any finding by the 

Court on these elements is against the great weight and preponderance of the 

evidence, requiring a new trial. 

A. Grayco Was Not Party to or Bound by the 2002 Lease Because it Was, 

as a Matter of Law, a Good Faith Purchaser for Value Without Notice 

of the 2002 Lease 

5. A bona fide purchaser is one who buys property in good faith, for 

valuable consideration, and without notice, actual or imputed, of outstanding claims 

of a third party. Swanson v. Grassedonio, 647 S.W.2d 716, 718 (Tex. App.-Corpus 

Christi 1982, no writ); Colvin v. Alta Mesa Res. Inc., 920 S.W.2d 688, 691 (Tex. 

App.-Houston 1996, no writ) (citing Cooksey v. Sinder, 682 S.W.2d 252, 253 (Tex. 

1984». 

6. Actual notice results from personal information or knowledge, as well 

as those facts which reasonable inquiry would have disclosed. Fletcher v. Minton, 

217 S.W.3d 755, 758 (Tex. App.-Dallas 2007, no pet.). Constructive notice, on the 

other hand, is notice the law imputes to a person not having personal information or 

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knowledge. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001). A purchaser has 

constructive notice of instruments recorded at the country clerk's office, and lying 

within the purchaser's chain of title. TEX. PROP. CODE § 13.002; see also Porter v. 

Earnhart, 343 S.W.2d 294, 297 (Tex. App.-Dallas 1960, writ refd n.r.e.). 

7. A bona fide purchaser of real property takes title free from any 

encumbrances of which the purchaser did not have actual or constructive notice. See 

Smith v. Shamburger, 273 S.W. 645, 646 (Tex. Civ. App.-Amarillo 1925, writ. 

dismissed); see also Hampshire v. Greeves, 130 S.W. 665, 668 (Tex. Civ. App. 1910) 

affd, 143 S.W. 147 (Tex. 1912); see also Flack v. First Nat'l Bank, 226 S.W.2d 628, 

631 (Tex. 1950). 

8. In 2007, Grayco Partners, LLC ("Grayco") purchased the Regatta 

Apartments and assigned its interests to Town Lake. While a 1992 Lease was 

recorded in the Deed of Records for Travis County, it is wholly undisputed that the 

2002 Lease was not recorded. Despite conducting a search of the real property 

records in Travis County, Texas, Grayco was not aware of the existence of the 2002 

Lease because it had not been recorded. 

9. Grayco purchased the property in good faith, for value, without actual 

or imputed notice of the 2002 Lease. Because Grayco was a bona fide purchaser of 

the property, it cannot be held liable for the terms and conditions of the 2002 Lease, 

and likewise could not breach the 2002 Lease. 

10. Town Lake then acquired the property from Grayco free of any 

obligation to Coinmach on or about April 26, 2007. As the successor in interest to 

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Grayco, Town Lake acquired the property from a bona fide purchaser and, as such, 

cannot be held liable under the 2002 Lease. Ball v. Presidio County, 29 S.W. 1042, 

1043 (Tex. 1895) ("To be a bona fide holder, one must be himself a purchaser for 

value without notice or the successor of one who was."). 

11. Consequently, Town Lake was not bound by the 2002 Lease and could 

not have breached the 2002 Lease. Alternatively, any finding that Town Lake was 

on notice (whether actual, constructive or inquiry notice) of the 2002 Lease is 

against the great weight and preponderance of the evidence. Thus, the judgment 

against Town Lake for a breach of the 2002 Lease is in error, and a new trial should 

be ordered. 

B. Grayco Did not Breach Any Material Obligation of the 2002 Lease 

12. The judgment against Town Lake is in error because the evidence is 

legally and factually insufficient to prove Town Lake breached the 2002 Lease. 

Because there is a complete absence of evidence to support Coinmach's breach of 

contract claim, the evidence is legally insufficient to support the judgment. Serrano 

v. Union Planters Bank, N.A., 162 S.W.3d 576,580 (Tex. App.-EI Paso 2004, pet. 

denied). 

13. Coinmach failed to identify a single term, clause, condition, or 

obligation in the 2002 Lease that Grayco breached. No provision of the 2002 Lease 

required Grayco to continue operating an apartment complex on the site or to 

maintain occupancy at a specified level. Coinmach's corporate representative, Ed 

Greene, testified that the 2002 Lease did not require Town Lake to maintain a 

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mInImUm occupancy level at the Regatta Apartments. Even under Coinmach's 

interpretation of the 2002 Lease, then, Town Lake could choose to renew-or not 

renew-as many tenant leases as it wished without breaching its contractual 

obligations to Coinmach. 

14. Here, Town Lake's corporate representative, John Britton, testified 

that Town Lake had difficulty finding qualified tenants for the Regatta Apartments, 

which ultimately led to the decision to close and demolish Regatta. Coinmach then 

sued Town Lake for shuttering the Regatta Apartments. Under Coinmach's own 

understanding of the 2002 Lease, Town Lake had every right to lease-down, close, 

and demolish Regatta. Indeed, demolition of the property is no different from 

maintaining Regatta with minimum or zero occupancy-both have the effect of 

eliminating revenue for Coinmach. Neither scenario is prohibited by the 2002 

Lease. 

15. Further, Coinmach admitted that Town Lake had no obligation to 

ensure that the tenants at the Regatta Apartments actually used Coinmach's 

laundry machines. Coin mach admitted that the 2002 Lease did not require Town 

Lake to force the tenants to use the laundry room; thus, Coinmach had no 

contractual expectation for any future revenues. This is especially true when read 

in conjunction with Coinmach's own position that the 2002 Lease required no 

minimum occupancy. 

16. Coinmach argues that an alleged lease-down of Regatta-which 

supposedly began before Town Lake even acquired the apartments-was a breach of 

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the 2002 Lease. But no provision of the 2002 Lease purports to impose a 

requirement that Grayco maintain a mlrumum occupancy level, as Coinmach 

admits. 1 Indeed, Coinmach's damages expert testified that he began calculating 

damages prior to the 2007 demolition based on this supposed breach. But, as 

discussed above, Coinmach admits that a lease-down would not be a breach of the 

2002 Lease. 

17. As a result, based on the plain language of the 2002 Lease-as well as 

Coinmach's own interpretation-Town Lake did not breach the 2002 Lease by 

either allegedly leasing-down Regatta, or by demolishing the property. 

18. Alternatively, any finding of breach by Grayco is against the great 

weight and preponderance of the evidence. 

C. Coinmach Suffered No Damages 

19. Even if Coinmach had proved Town Lake breached the 2002 Lease, 

Coinmach utterly failed to prove that it suffered any damages. As previously 

discussed, the 2002 Lease did not guarantee any minimum monthly earnings for the 

laundry machines. If tenants chose not to use the laundry machines, or there were 

no tenants to use them, the laundry machines would have had zero revenue, and 

Coinmach would not be entitled to anything else. As a result, Coinmach never had 

any contractually-guaranteed revenues. 

20. Coinmach asked the Court to speculate as to what the revenue would 

have been, using the assumptions that there would be tenants to use the laundry 

I The only way to impose such a requirement would be to impose it as a concomitant of the duty of good faith. 

Texas courts have unambiguously rejected the notion that there is a duty of good faith in an ordinary contract. 

English v. Fischer, 660 S.W.2d 551, 522 (Tex. 1983). 

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room and the tenants would, in fact, have used the laundry rooms but for Town 

Lake's supposed decision to lease-down and then demolish the Regatta 

Apartments. 2 But a party may not recover damages for breach of contract if those 

damages are remote, contingent, speculative or conjectural. Southwest Battery Corp. 

v. Owen, 115 SW.2d 1097, 1099 (Tex. 1938); Pace Corp. v. Jackson, 248 S.W.2d 340, 

348 (Tex. 1955); City of Dallas v. Village of Forest Hills, L.P., Phase I, 931 S.W.2d 

601, 605 (Tex. App.-Dallas 1996, no writ). Lost profits claimed as damages must 

be established to a reasonable certainty. Holt Atherton Indus., Inc. v. Heine, 835 

S.W.2d 80, 84 (Tex. 1992). 

21. Based on the unrefuted testimony from Mr. Britton, occupancy at the 

Regatta Apartments was declining due to the terrible condition of the apartments. 

The conditions-which were present before Town Lake acquired the property-were 

such that vagrants had taken up residence at the Regatta Apartments. Coinmach 

has absolutely no basis to assume that there would have been tenants at the 

Regatta Apartments willing and able to use the laundry machines through the 

expiration of the 2002 Lease. 

22. Therefore, Coinmach's claim for damages fails for two reasons: (a) 

there were no provable damages suffered because Coinmach was not entitled to any 

specific amount of revenue or profits from the machines; and (b) any damages 

Coinmach claims it is entitled to are speculative at best. 

2 Notably, Coinmach's entire damages analysis is premised on supposed actions by Town Lake that even Coinmach 

admits were not breaches. This is fatal to Coinmach's claims. 

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23. Importantly, Coinmach's failure to prove its damages extends to both 

its breach of contract claim and its breach of the covenant of quiet enjoyment claim. 

Even assuming that Town Lake breached the covenant of quiet enjoyment, 

Coinmach suffered no damages for the same reasons that it suffered no damages 

from its breach of contract claim. 

24. Alternatively, any finding that Coinmach suffered damages as a result 

of the alleged breach of the 2002 lease by Grayco is against the great weight and 

preponderance of the evidence. 

D. Coinmach Failed to Mitigate its Damages 

25. The mitigation of damages doctrine requires an injured party, 

following a breach, to exercise reasonable care to minimize his damages. Great Am. 

Ins. Co. v. N. Austin Mun. Util. Dist. No.1, 908 S.W.2d 415,426 (Tex. 1995); Walker 

v. Salt Flat Water Co., 96 S.W.2d 231, 232 (Tex. 1936). A plaintiff has a duty to use 

ordinary care and reasonable diligence to minimize its damages. Geotech Energy 

Corp. v. Gulf States Telecomm. and Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex. 

App.-Houston [14th Dist.] 1990, no writ). 

26. When an injured party fails to comply with the duty to mitigate 

damages, recovery is not permitted as to that part of damages that could have been 

avoided or was incurred as a result of the failure to mitigate. Pinson v. Red Arrow 

Freight Lines, Inc., 801 S.W.2d 14, 15 (Tex. App.-Austin 1990, no pet.) (citing 

Alexander & Alexander of Tex., Inc. v. Bacchus Indus., Inc., 745 S. W.2d 252, 253 

(Tex. App.-EI Paso 1988, writ denied». 

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27. The evidence at trial, however, proved that Coinmach unreasonably 

failed to mitigate its damages. For instance, Exhibit 15 is a letter from Town 

Lake-through its agent, Greystar-informing Coinmach of the decision to close 

Regatta, discussing the reasons behind the decision, and requesting Coinmach 

collect its laundry machines. 3 And Exhibit 16 is an email from Greystar again 

asking Coinmach to collect the washing machines and dryers prior to the demolition 

of Regatta. Coinmach admitted that it received these correspondences. 

28. Despite being provided with ample notice of Town Lake's intent to 

demolish the Regatta Apartments, Coinmach chose to ignore Town Lake's request, 

leave the laundry machines, and allow them to be demolished. That decision is 

inexcusable because Mr. Greene admitted that Coinmach has, on occasion, removed 

laundry machines from one location and placed them in another location. Mr. 

Greene also testified that Coinmach could have collected the machines from the 

Regatta Apartments and placed them in another facility in order to generate 

revenue and offset the alleged damages suffered by Coinmach. 

29. Thus, Coinmach's failure to mitigate its damages bars its recovery of 

the amount awarded in the judgment. Alternatively, any finding that Coinmach 

exercised reasonable diligence to mitigate its damages is against the great weight 

and preponderance of the credible evidence. 

III. CONCLUSION 

Town Lake proved it was a bona fide purchaser of the Regatta Apartments. 

As such, Town Lake was neither a party to nor bound by the obligations of the 2002 

3 All referenced exhibits were admitted at trial. 

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497 
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Lease. Alternatively, even if Town Lake was subject to the obligations of the 2002 

Lease, the evidence Coinmach presented at trial is legally and factually insufficient 

to support its claim that Town Lake breached the 2002 Lease. Further, even if 

Town Lake breached the Lease, Coinmach suffered no damages and, in any event, 

completely failed to mitigate its damages, which precludes recovery. Because 

Coinmach failed to prove its contract claims against Town Lake, the award for 

attorneys' fees should also be vacated. 

Therefore, Defendant, Grayco Town Lake Investments 2007 LP, asks the 

Court to vacate its judgment and grant a new triaL 

Respectfully submitted, 

DOBROWSKI, LARKIN & JOHNSON LLP 

By: / s / Akilah F. Craig 

Frederick T. Johnson 

SBN 00785429 

Cody W. Stafford 

SBN 24068238 

Leah N. Maxwell 

SBN 24073454 

Akilah F. Craig 

SBN 24076194 

4601 Washington Ave, Suite 300 

Houston, Texas 77007 

713.659.2900 - Telephone 

713.659.2908 - Facsimile 

ATTORNEYS FOR DEFENDANT GRAYCO 

TOWN LAKE INVESTMENT 2007 LP 

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CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of Defendant Grayco Town 

Lake Investment 2007, LP's Motion for New Trial has been served on this 8th 

day of December, 2014 as follows: 

VIA EMAIL AND FACSIMILE 

R. Kemp Kasling 

Kasling, Hemphill, Dolezal & Atwell, L.L.P. 

301 Congress Avenue, Suite 300 

Austin, TX 78701 

/s/ Cody W. Stafford 

Cody W. Stafford 

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