Opinion issued February 13, 2014

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-12-00677-CV

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MICHELIN NORTH AMERICA, INC., Appellant

V.

FIRST INDUSTRIAL NLF 12 JV, LLC, Appellee

On Appeal from the 295th District Court

Harris County, Texas

Trial Court Case No. 2009-16011

MEMORANDUM OPINION

This appeal arises from a declaratory judgment action to construe a 

commercial lease and a counterclaim for breach of that lease. A jury returned a 

verdict in favor of appellant, Michelin North America, Inc. Appellee, First 

Industrial FR NLF 12, LLC, moved for judgment notwithstanding the verdict. The 
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trial court granted the motion and awarded First Industrial damages for breach of 

contract. 

On appeal, Michelin argues that the court erred by entering JNOV. Michelin

claims that either it was the party entitled to judgment as a matter of law or, 

alternatively, interpretation of the contract was a fact question, and there was 

sufficient evidence to support the jury’s verdict. We affirm the judgment.

Background

Michelin keeps some of its famous tires in a large Harris County warehouse. 

It used to own this warehouse, but it sold the building in January 2006 to First 

Industrial as part of a deal in which it would lease the premises. The parties heavily 

negotiated the agreement and deployed lawyers at the bargaining table. The lease 

ultimately included a paragraph on insurance which provided that First Industrial 

would hold a policy insuring the building but would bill Michelin for the policy’s 

costs.

In September 2008, Hurricane Ike damaged the warehouse. During the 

preceding years, First Industrial had neglected to bill Michelin for the cost of 

insuring the warehouse. Now that the building was in need of repair, however, 

First Industrial invoiced Michelin $232,210.04 for insurance premiums covering 

February 2006 to the end of 2008. The parties disputed this figure but finally

reached a compromise. Then, First National demanded payment for $1,327,642,
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corresponding to expenses incurred to satisfy the deductible on the warehouse

policy.

Michelin filed suit seeking a declaratory judgment that, since First Industrial 

had failed to give advance notice of the amount of the policy’s deductible,

Michelin did not owe the $1.3 million sought. It contended that section 9.2 of the 

lease obliged First National to inform it of the size of the deductible at the 

beginning of each “Lease Year,” which corresponded to the calendar year. The 

section reads:

9.2 Landlord shall maintain: (a) a commercial property insurance 

policy covering the Premises (at its full replacement cost), but 

excluding Tenant’s and TPL’s personal property; (b) commercial 

general public liability insurance covering Landlord for claims arising 

out of liability for bodily injury, death, personal injury, advertising 

injury and property damage occurring in and about the Premises and 

otherwise resulting from any acts and operations of Landlord, its 

agents and employees; (c) rent loss insurance; and (d) any other 

insurance coverage deemed appropriate by Landlord or required by 

Landlord’s lender. All of the coverages described in (a) through (d) 

shall be determined from time to time by Landlord, in its reasonable 

discretion. All insurance maintained by Landlord shall be in addition 

to and not in lieu of the insurance required to be maintained by the 

Tenant. Tenant shall pay to Landlord all market-based premiums for 

commercial property, casualty, boiler, flood, earthquake, terrorism 

and all other types of insurance (other than general public liability 

insurance) provided by Landlord and relating to the Premises, all 

reasonable administrative costs incurred in connection with the 

procurement and implementation of such insurance policies and all 

commercially reasonable deductibles paid by Landlord pursuant to 

insurance policies required to be maintained by Landlord under this 

Lease (collectively, “Insurance Costs”). Landlord shall notify Tenant 

of the amount of such Insurance Costs for each Lease Year and 

Tenant shall pay, on the first day of each month during that Lease 
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Year, an amount equal to such amount divided by 12 (or the fractional 

portion of the Lease Year remaining at the time Landlord delivers its 

notice of the amounts due from Tenant for that Lease Year); or at 

Landlord’s election, Landlord may instead bill Tenant annually for 

such insurance charges and Tenant shall pay all such charges to 

Landlord, as Additional Rent, within thirty (30) days after Landlord’s 

delivery of written demand therefor. Notwithstanding the preceding 

provisions of this grammatical paragraph concerning insurance to be 

procured and maintained by Landlord, Tenant shall have the right, at 

any time during the term and upon sixty (60) days’ advance written 

notice to Landlord, to elect to itself procure and maintain the property 

insurance described in (a) above (the “Tenant’s Insurance Election”). 

Tenant may not exercise Tenant’s Insurance Election in the event of a 

breach or default by Tenant hereunder that remains uncured at the 

time Tenant desires to exercise Tenant’s insurance Election. If Tenant 

exercises Tenant’s Insurance Election, then Tenant shall be solely 

responsible for the timely payment of all insurance premiums imposed 

with respect to such property insurance, and all of the applicable 

provisions of Section 9.1 shall apply with respect to such property 

insurance coverage.

(Emphasis supplied.)

First Industrial counterclaimed for breach of contract. Both parties moved

for summary judgment. Both motions were denied by the then-presiding judge, 

who decided that ambiguities in the lease required a trial.

A different judge oversaw the subsequent jury trial. Michelin took the 

position that it had negotiated language in Section 9.2—“Landlord shall notify 

Tenant of the amount of such Insurance Costs . . . ”—so that it could know the 

amount of the deductible on the policy First Industrial had purchased and 

intelligently decide whether to exercise its “Tenant’s Insurance Election” to 

procure its own coverage. As Michelin protested, its concern had been merely to 
5

obtain insurance with the best combination of deductible and cost. During 

negotiations, it was amenable to permitting First Industrial to be the party that 

carried insurance on the warehouse so long as the landlord could obtain a better 

value. Otherwise, it wanted to secure its own insurance contract. So when First 

Industrial presented a $1.3 million bill, Michelin claimed to have been blindsided, 

both because it had been led by First National’s representations to believe that 

deductible costs would be much lower and because it had no prior warning during 

the years in which the lease was in effect that First Industrial’s policy included a 

deductible of that magnitude. 

Michelin offered evidence of the course of negotiations and other extrinsic 

proof. In the end, the jury returned a verdict in favor of Michelin. It decided that 

the parties’ agreement required First National to give notice of policy deductibles 

for each “Lease Year” regardless of whether deductibles had been paid due to a 

claimed loss.

First Industrial responded to the jury’s findings with a motion for judgment 

notwithstanding the verdict. It made two separate arguments. First, it contended 

that the lease unambiguously did not require notice of a deductible unless such a 

deductible was actually paid; therefore, it was entitled to judgment as a matter of 

law. In the alternative, it argued that the evidence was insufficient to support the 
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jury’s findings. The trial court entered a JNOV but did not explain the grounds of 

its decision. Michelin has since brought this appeal.

Analysis

As the trial court did not explain the basis of its ruling, Michelin’s brief 

addresses both the sufficiency of the evidence and the correct legal interpretation

of the contract. Michelin also contends that if the contract is indeed unequivocal, 

then it favors Michelin. We conclude that the text of the lease unmistakably

supports First Industrial’s interpretation, and thus we need not address the 

sufficiency of the evidence.

This appeal arises from a grant of JNOV. See TEX. R. CIV. P. 301. There are 

two valid reasons for judgment as a matter of law after a jury verdict. Spencer v. 

Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994); Fazio v. Cypress/GR 

Hous. I, L.P., 403 S.W.3d 390, 394 (Tex. App.—Houston [1st Dist.] 2013, pet.

denied). The first is that the jury’s findings are actually immaterial to resolution of 

the controversy before the court. Spencer, 876 S.W.2d at 157. For example, if a 

trial court decides that a written contract is unambiguous, then it should give the 

contract its plain meaning as a matter of law; this circumstance leaves the jury’s 

findings of fact as to the parties’ true intent irrelevant to the outcome of the case. 

When a motion for JNOV is thus granted based on a legal principle, it is reviewed 

de novo. JSC Neftegas–Impex v. Citibank, N.A., 365 S.W.3d 387, 396 (Tex. 
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App.—Houston [1st Dist.] 2011, no pet.). The second reason JNOV may be 

appropriate is that the evidence is insufficient to support the jury’s verdict. 

Spencer, 876 S.W.2d at 157. A JNOV granted on those grounds is reviewed for 

“no evidence,” or for “legal sufficiency.” See Wal-Mart Stores, Inc. v. Miller, 102 

S.W.3d 706, 709 (Tex. 2003) (per curiam).

If a written contract has a definite legal meaning, then a court should read 

the text and construe it as a matter of law without help from a jury. Frost Nat’l 

Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (per curiam); 

Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). When the words on the page 

suffice, a court should not look outside the document to decide what the parties 

agreed. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). The 

overriding objective is to “ascertain and give effect to the parties’ intentions as 

expressed in the document.” Frost Bank, 165 S.W.3d at 311–12.

However, if a contract is ambiguous, the court should accept parol evidence 

and can empanel a jury to decide, as an issue of fact, the “true intent of the 

parties.” Coker, 650 S.W.2d at 394–95. A contract is ambiguous if it is open to 

more than one reasonable reading. Frost Bank, 165 S.W.3d at 312. Deciding 

whether a contract is ambiguous is itself an issue of law for the court. Webster, 128 

S.W.3d at 229.
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To determine whether a contract is ambiguous, courts apply standard rules 

of interpretation. Frost Bank, 166 S.W.3d at 312. These rules require an attempt to

harmonize the contract as a whole. Id. An ideal harmonization will not treat any 

clause as a nullity, and courts generally presume that every provision was intended 

to have some effect. Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 

(Tex. 1996). Words should be given their ordinary meaning unless it appears from 

context that they were used in a technical or different sense. Id. Courts should 

interpret contracts from a utilitarian perspective, keeping in mind the parties’ 

business objectives. Frost Bank, 165 S.W.3d at 312. Absurd, inequitable, or 

oppressive interpretations are to be eschewed unless they prove unavoidable. Id.

The lease did not include any express language requiring First Industrial to 

notify Michelin of the size of the deductibles on the policy it carried for the 

warehouse. Paragraph 9.2 provided two alternative methods by which the landlord 

could bill the tenant for “Insurance Costs.” Under one method, the landlord could 

notify the tenant of the amount of Insurance Costs for the Lease Year, and the 

tenant would be obligated to pay the Insurance Costs in twelve monthly payments 

over the course of that Lease Year. First Industrial did not exercise this option. 

Instead, as permitted by the lease, it elected to “bill Tenant annually” for the 

Insurance Costs.
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The lease defines “Insurance Costs” to include “all market based 

premiums . . . and all commercially reasonable deductibles paid by Landlord 

pursuant to insurance policies required to be maintained by landlord under this 

Lease.” Because Michelin disputes the inclusion of deductibles as part of the 

“Insurance Costs” that it owes, the critical word for purposes of this dispute is 

“paid.” If the prior year did not feature a claimed loss, then there would be no 

deductible to pay and the Insurance Costs would include only the amount of the 

premiums plus reasonable administrative costs. In sum, Paragraph 9.2 explains 

how First Industrial would invoice Michelin for all the costs related to insuring the 

property in Michelin’s stead. The “Insurance Costs” include any actual payments 

that First Industrial made to satisfy a deductible.

Michelin contends that a plausible reading of Paragraph 9.2 requires the 

landlord to inform the tenant of the amount of the deductible on the policy 

regardless of whether there has been a claimed loss. In other words, it asserts that 

Paragraph 9.2 was both a notice provision and a billing provision. It presents two 

arguments in support of its interpretation. 

It first argues that it makes no sense to limit reporting to cases in which 

deductibles are “paid,” because deductibles are never “paid.” A deductible, 

Michelin observes, is merely an amount deducted from compensation provided by 

an insurer. While Michelin is correct about the way deductibles shift costs under
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insurance policies, we do not agree that the idea of “paying” a deductible is 

nonsense. A deductible is “the portion of the loss to be borne by the insured before 

the insurer becomes liable for payment.” BLACK’S LAW DICTIONARY 422 (9th ed. 

2009). If a policy holder chooses to repair or replace insured property, then it will 

have to pay the amount of the deductible, “the amount of the loss specified in such 

a clause.” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 301 (10th ed. 1993). 

This is what is commonly meant by “paying a deductible,” and it is a usage of 

speech encountered in Texas case law. E.g., Fireman’s Fund Cnty. Mut. Ins. Co. v. 

Hidi, 13 S.W.3d 767, 768 (Tex. 2000) (per curiam) (“[T]he claim was subject to a 

deductible paid by the insured . . . .”); Phillips Petroleum Co. v. St. Paul Fire & 

Marine Ins. Co., 113 S.W.3d 37, 42 (Tex. App.—Houston [1st Dist.] 2003, pet. 

denied) (reciting from an insurance company notice, “This change adds deductibles 

to be paid by you.”); Jackson v. Gutierrez, 77 S.W.3d 898, 904 n.4 (Tex. App.—

Houston [14th Dist.] 2002, no pet.) (“Because appellee’s insurance paid for the 

repairs, the parties’ dispute actually concerns only the $250 deductible appellee 

paid as a result of the accident.”). Considering the foregoing, there is nothing 

anomalous about including “deductibles paid” as an “Insurance Cost.”

Michelin’s second argument is that interpreting the lease to require advance 

reporting of the amount of the policy deductible is necessary to avoid making the

provision for the Tenant’s Insurance Election irrelevant. Michelin contends that it 
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could not make an informed decision as to whether it should purchase its own 

coverage if it did not know the quality of coverage that First Industrial was 

obtaining. But Michelin does not explain why it could not simply inquire about the 

terms of the policy if it wished to investigate its options in this regard. It did not 

have to wait for a yearly report to make such inquiries. Michelin could also make 

use of the election after a loss brought an unhappily high deductible charge from 

First Industrial. For both these reasons, our reading of the contract does not lead us 

to agree that advance reporting of the deductible must be implied to make the

Tenant’s Insurance Election a meaningful right.

The lease unambiguously does not require First Industrial to give Michelin 

advance notice of the amount of the policy’s deductible. See R & P Enters. v. 

LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980) (“If a written 

instrument is so worded that a court may properly give it a certain or definite legal 

meaning or interpretation, it is not ambiguous.”). As the contract is unambiguous, 

our determination of its meaning is a legal conclusion. See Frost Bank, 165 S.W.3d 

at 312. The trial court correctly disregarded the jury’s findings and entered

judgment in favor of First Industrial.
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Conclusion

We affirm the judgment of the trial court.

Michael Massengale

Justice 

Panel consists of Justices Keyes, Higley, and Massengale.

Justice Keyes concurring in the judgment only