Court Opinion

ID: 9457889
Source: CourtListenerOpinion
Date Created: 2023-08-04 20:36:36.707475+00
Date Added: 2024-06-11T17:31:44.972823
License: Public Domain

CLARK, Circuit Judge
(concurring in part and dissenting in part).
I concur in all of Judge Thornberry’s opinion except that related to the manner in which the jury was presented their task of resolving the issue of damages resulting from St. Regis’s anticipatory breach of the lease agreement. As the majority points out, the basis for the measure of damages rule in such a situation is well-settled under Texas law — it is compensation not penalization. Proper damages equal the amount which represents the difference between the present value of the remaining rentals contracted for in the lease, and the reasonable cash market value of the lease for its unexpired term. Warncke v. Tarbutton, 449 S.W.2d 363, 364 (Tex.Civ.App.—San Antonio 1969, writ ref’d n.r.e.); Heller & Co. v. Allen, 412 S.W.2d 712, 720 (Tex.Civ.App.— Corpus Christi 1967, writ ref’d n.r.e.); White v. Watkins, 385 S.W.2d 267, 271 (Tex.Civ.App.—Waco 1964, no writ). Thus, if the present value of the remaining rentals is zero — or indeed if it is any figure less than the market value of the unexpired lease term — then plaintiff can be permitted no recovery, because it has not been damaged. Thus, the difference between us is not what the Texas law is but how it should have been applied to this case.
Ordinarily, the question is simply— did the lessor have such an advantageous contract with the lessee that he, the lessor, would get less for his premises if he relet them today, than when he first contracted with the lessee? If so, the breaching lessee must pay the old horn-book “difference between contract price and market price.” In the normal situation, the jury’s calculation will not be a difficult one. Step one, calculate the present value of the remaining rentals. Step two, determine what the •'lessee could get for its lease on the open market today. This must generally be only a prediction. By the very definition of anticipatory breach awards, that is all it can be — compensation today for damages that likely will accrue in a future period.
In a few cases the jury’s function will be reduced even further: if the lessor for some reason can no longer perform his part of the contract and under the lease forfeits further rental payments, then the present value is zero. It is this type of case the majority has aptly designated an “impossibility of performance” case. I agree that the option to rebuild the premises in the event of their destruction in this lease, takes this case out of the “impossibility” category. But at this point our agreement ends. This case cannot be analogized to a claim of breach of a “duty to maintain” clause case wherein “the innocent party after repudiation is not required, in order to recover anticipatory damages, to perform his obligations under the con*354tract,” or that it involves “only an obligation of the lessor which lessor was fully capable of performing at all times.”
If this were apropos, I would agree that “(t)he lessor need not maintain the leased premises for the lessee under such circumstances.” However, with deference, such an analysis mischarae-terizes the case. The situation before us does not involve a question of maintaining premises, for there were no premises left to maintain. Nor does it involve an obligation of the lessor that we might think it futile to require it to perform in light of the lessee’s breach, for the warehouse company has no obligation — it has an option to revive the lease. Here, there was a total destruction of the object of the contract, an event which if not rectified by the lessor, the parties have specifically provided will effect — not a suspension of the lease, not a penalty for failure to perform, not a right to sue for damages —but a complete termination of the contract.
Thus, though I agree it would be incorrect for us to find that plaintiff has not been damaged by the breach, on the theory that it would have been impossible for it to perform, I think we commit error by conclusively presuming it would have acted to revivify the agreement for the remaining term. For plaintiff-lessor was not facing a problem of merely maintaining the premises in good working order; in order to have demanded a single dollar of rent after the date of destruction, plaintiff would have faced the task of reconstructing the entire warehouse. I make no implication whatever that plaintiff would not have rebuilt. That is not a question for this appellate court. It is one for a trial jury. But it was the court — not the jury — that decided it in the case at bar.
The most important element of the jury’s prediction in this case concerned the likelihood that a comparable warehouse needed to produce rental income during the unexpired term of the lease would be brought back into existence. Without that initial assessment, no intelligent estimation of the present value of future rentals, or the reasonable cash market value of the unexpired term could possibly be made. That crucial consideration was omitted from the jury’s deliberations. The charge instructed the jury to take for granted that the warehouse would be rebuilt, simply because lessor might opt to rebuild. Such a charge divides all cases of this genre into two groups: impossibility of performance and certainty of performance. I would refuse to invade the jury’s province in such a fashion. They should make the prediction of fact.
I would affirm as to breach and acceptance but reverse the judgment and remand to the lower court for trial limited to the issue of damages. This would permit the parties to introduce evidence upon the likelihood that the warehouse would have been rebuilt. The jury then could consider such evidence in determining the amount, if any, by which plaintiff was damaged by the breach.