Court Opinion

ID: 4691404
Source: CourtListenerOpinion
Date Created: 2021-05-31 07:17:04.680645+00
Date Added: 2024-06-11T08:05:08.214097
License: Public Domain

In the
                    Court of Appeals
            Second Appellate District of Texas
                     at Fort Worth
                  ___________________________
                       No. 02-20-00189-CV
                  ___________________________

 THE CUSTOMER CENTER OF DFW INC. D/B/A SPRINT STORE BY THE
  CUSTOMER CENTER AND THE CUSTOMER CENTER INC., Appellants

                                 V.

RPAI NORTH RICHLAND HILLS DAVIS LIMITED PARTNERSHIP, Appellee

               On Appeal from the 342nd District Court
                       Tarrant County, Texas
                   Trial Court No. 342-312627-19

               Before Birdwell, Bassel, and Womack, JJ.
               Memorandum Opinion by Justice Birdwell
                           MEMORANDUM OPINION

      A landlord sued its tenant for breach of a commercial lease, and the tenant

raised affirmative defenses. The trial court granted summary judgment in favor of the

landlord. We conclude that the tenant’s evidence created a fact issue on its defense of

failure to mitigate, which is enough to defeat summary judgment. We therefore

reverse and remand.

                                 I.     BACKGROUND

      In 2015, appellant The Customer Center of DFW Inc. (“Tenant”) signed a five-

year lease for a commercial space at a shopping center owned by appellee RPAI

North Richland Hills Davis Limited Partnership. The other appellant, The Customer

Center Inc., signed a guaranty of the lease.

      In early 2017, Tenant notified RPAI that it was losing money and asked RPAI

about finding a new tenant. In March 2017, RPAI and Tenant executed a re-leasing

agreement in which RPAI promised to try to find a new tenant, and Tenant promised

to keep making payments in the meantime. But Tenant offered testimony that, over

the years that followed, RPAI’s efforts to find a new tenant were negligible and that

RPAI even took steps to undercut Tenant’s attempt to facilitate the process. In June

2017, Tenant informed RPAI that it would be closing its doors.

      In January 2018, RPAI informed Tenant that it had found a replacement

tenant, but RPAI requested a $110,000 fee in exchange for terminating the lease,

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which Tenant refused. In April 2018, Tenant offered two potential tenants who were

willing to take over the lease, but RPAI rejected them without explanation.

      In an attempt to salvage the venture, Tenant reopened its store on

September 11, 2018, but it lost money and closed again in March 2019.

      RPAI sued Appellants for breach of the lease and the guaranty in October

2019, alleging that they had failed to pay rent since December 2018. RPAI moved for

traditional summary judgment on its claims, relying on a declaration by RPAI’s

property manager that Tenant had stopped paying rent.

      Appellants then amended their answer to raise defenses concerning RPAI’s

allegedly poor effort to relet the premises: that RPAI failed to mitigate its damages

and that it materially breached the lease by failing to relet the premises, thus relieving

Appellants of any obligation to pay rent under the lease. Appellants sought to avoid

summary judgment by raising a fact issue on those defenses, relying on an affidavit by

Appellants’ CEO and president Luigi V. Ambrosio. Ambrosio swore to most of the

facts we have recited above.

      The trial court granted final summary judgment to RPAI awarding damages of

$74,096.13, attorney’s fees of $3,500, and costs. Appellants appealed.

                        II.    SUMMARY JUDGMENT BURDEN

      In their first issue on appeal, Appellants assert that the trial court applied the

wrong standard at summary judgment. Appellants submit that “[w]hen a plaintiff

moves for traditional summary judgment on a defendant’s affirmative defenses, the

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burden is on the plaintiff to come forth with sufficient evidence to conclusively

negate an element of the defendant’s affirmative defenses.” According to Appellants,

it was RPAI’s burden to conclusively negate at least one element of Appellants’

defenses of failure to mitigate and prior material breach.

       We take no issue with Appellants’ general statement of the law concerning

situations where a plaintiff moves for traditional summary judgment on a defendant’s

affirmative defenses. “In the context of a plaintiff’s traditional motion for partial

summary judgment to dispose of a defendant’s affirmative defense, a plaintiff may

prevail by conclusively negating at least one element of the defense.” Berry Contracting,

L.P. v. Mann, 549 S.W.3d 314, 322 (Tex. App.—Corpus Christi–Edinburg 2018, pet.

denied).

       However, that law does not apply here. RPAI was not using the summary

judgment process to attack Appellants’ affirmative defenses.           Rather, RPAI was

moving for summary judgment on its own claims in an attempt to dispose of the case

fully and finally. That being the situation, it was RPAI’s initial burden to conclusively

prove all essential elements of its own contract claim, not to conclusively negate

Appellants’ defenses. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986); Charles

Glen Hyde, Nw. Reg’l Airport, Inc. v. Nw. Reg’l Airport Prop. Owners Ass’n, Inc., 583 S.W.3d

644, 648 (Tex. App.—Fort Worth 2018, pet. denied). A plaintiff satisfies its initial

summary judgment burden if it conclusively proves all essential elements of its cause

of action. Charles Glen Hyde, 583 S.W.3d at 648. Further, we consider the evidence

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presented in the light most favorable to the nonmovant, crediting evidence favorable

to the nonmovant if reasonable jurors could, and disregarding evidence contrary to

the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Appellants do not dispute

that RPAI carried its initial burden.

       If the movant carries its initial burden, “the burden shifts to the nonmovant to

raise a genuine issue of material fact precluding summary judgment.”            Lujan v.

Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). Where the nonmovant relies on an

affirmative defense such as mitigation to defeat summary judgment, the nonmovant

has the burden in its summary judgment response to present evidence sufficient to

raise a fact issue on each element of the affirmative defense. See Am. Petrofina, Inc. v.

Allen, 887 S.W.2d 829, 830 (Tex. 1994); H & H Steel Fabricators, Inc. v. Wells Fargo

Equip. Fin., Inc., No. 02-15-00391-CV, 2016 WL 6277371, at *5 (Tex. App.—Fort

Worth Oct. 27, 2016, no pet.) (mem. op.).

       The onus with respect to Appellants’ defenses therefore fell on Tenant, not

RPAI. Appellants’ issue arguing to the contrary is overruled.

                             III.   TENANT’S DEFENSES

      We next take up Appellants’ third issue, in which they argue that there was a

fact issue on their affirmative defense of failure to mitigate. Appellants argue that

their undisputed evidence concerning RPAI’s poor attempt to relet the premises

should have precluded summary judgment.

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      A landlord has a duty to make reasonable efforts to mitigate damages when the

tenant breaches the lease and abandons the property.             Tex. Prop. Code Ann.

§ 91.006(a); Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 299

(Tex. 1997) (op. on reh’g); Hoppenstein Props., Inc. v. Schober, 329 S.W.3d 846, 849 (Tex.

App.—Fort Worth 2010, no pet.). “A landlord should not be allowed to collect rent

from an abandoning tenant when the landlord can, by reasonable efforts, relet the

premises and avoid incurring some damages.” Austin Hill Country, 948 S.W.2d at 299.

“The landlord’s failure to use reasonable efforts to mitigate damages bars the

landlord’s recovery against the breaching tenant only to the extent that damages

reasonably could have been avoided.” Hoppenstein, 329 S.W.3d at 849. However, the

landlord is not required to simply fill the premises with any willing tenant; the

replacement tenant must be suitable under the circumstances. Id.

      “A tenant’s assertion that a landlord failed to mitigate damages is an affirmative

defense.” Id. Thus, the tenant bears the burden to demonstrate that the landlord has

failed to mitigate damages and the amount by which the landlord could have reduced

its damages. Austin Hill Country, 948 S.W.2d at 299. The duty to mitigate is designed

“to discourage the waste that results when a party sits still and lets damages pile up

when reasonable steps would prevent further loss,” Mellema v. Cargill, Inc., No. 05-92-

00375-CV, 1993 WL 58518, at *6 (Tex. App.—Dallas Feb. 26, 1993, no writ) (not

designated for publication), rather than to “penalize the mitigating party for not doing

enough.” Hoppenstein, 329 S.W.3d at 850.

                                            6
      Appellants offered some evidence of RPAI’s failure to make reasonable efforts

to mitigate damages, as well as the amount of damages that could potentially have

been avoided through mitigation. Viewed in the light most favorable to Appellants,

the record establishes the following:

   • In the 2015 lease, RPAI pledged to make “good faith,” “commercially

      reasonable efforts” to find a replacement tenant in the event of a default by

      Tenant;

   • In March 2017, RPAI renewed that promise in the “Re-Leasing Agreement”

      after Tenant notified RPAI that it was closing its store with 42 months left on

      the lease;

   • RPAI failed to locate a new tenant over the next three-and-a-half years;

   • That failure was attributable to RPAI’s refusal to take minimum efforts to find

      a replacement tenant, such as by declining to show on its website that the

      premises were available, despite multiple requests from Tenant;

   • RPAI also barred Tenant from displaying a “for rent” sign to assist in the

      reletting process;

   • In January 2018, RPAI notified Tenant that it had located a replacement tenant,

      but in exchange for terminating the lease, it demanded a $110,000 fee from

      Tenant that was not contemplated by the parties’ agreements;

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   • Based on the timetable of events and the terms of the lease, it is evident that if

      RPAI had reasonably accepted the new tenant in January 2018 instead of trying

      to extract an additional payment from Tenant, RPAI could have potentially

      mitigated roughly $90,000 in damages, which represents the remaining twenty-

      one monthly payments on the lease after Tenant stopped paying rent in

      December 2018;

   • In April 2018, Tenant brought to RPAI’s attention two more suitable

      replacement tenants who were willing to take over the existing lease, but RPAI

      rejected both without explanation; and

   • Had RPAI reasonably accepted either one of the proposed tenants in April

      2018, it would have mitigated roughly $90,000 in damages.1

      1
       Luigi Ambrosio’s affidavit was the source of most of this evidence, but RPAI
maintains that his affidavit is conclusory and therefore no good as summary judgment
evidence. See Atmos Energy Corp. v. Paul, 598 S.W.3d 431, 467 (Tex. App.—Fort
Worth 2020, no pet.). We disagree. “A conclusory statement is one that does not
provide the underlying facts to support the conclusion.” Gaber v. U.S. Bank Nat’l
Ass’n as Tr. for Truman 2016 Title Tr., No. 02-19-00243-CV, 2020 WL 5242419, at *4
(Tex. App.—Fort Worth Sept. 3, 2020, pet. denied) (mem. op.) (quoting Residential
Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex. App.—Fort Worth 2006, no
pet.)). Ambrosio’s affidavit is composed of hard factual matter, not vague
declarations parroting the elements. He provided specific facts to substantiate the
elements, with a detailed timeline of the ways in which RPAI refused to reasonably
pursue mitigation.

       RPAI also attacks the affidavit in another way: it contends that Ambrosio
failed to demonstrate the basis of his personal knowledge. See Kerlin v. Arias, 274
S.W.3d 666, 668 (Tex. 2008) (per curiam). Again, we differ in our estimation of the
affidavit. “[A] person’s position or job responsibilities can peculiarly qualify [him] to

                                           8
      We believe that despite Appellants’ inability to pinpoint the exact amount of

damages that could have been avoided, the above evidence nonetheless gives rise to a

fact issue on failure to mitigate, as is shown by Hygeia Dairy Co. v. Gonzalez, 994

S.W.2d 220 (Tex. App.—San Antonio 1999, no pet.) (en banc op. on reh’g). There, a

dairy sold fifty-one head of cattle to a rancher, but unbeknownst to the rancher, the

cattle were diseased. Id. at 222. The rancher’s stock began to die off in 1993, forcing

him to liquidate his entire herd in late 1994, and he sued the dairy. Id. The dairy

pleaded the defense of failure to mitigate; it argued and proffered evidence that when

the rancher started to lose cattle, he should have tested the dead and dying animals to

determine exactly what was causing the deaths. Id. at 224. Nonetheless, the trial court

refused to submit the mitigation issue to the jury. Id. On appeal, the court agreed the

trial court should have submitted the mitigation issue to the jury, even though the

dairy’s trial evidence did not “prove the exact amount of damages attributable to” the

rancher’s neglect. Id. at 225. “We believe the law does not require such a showing,

especially when the damages themselves are unliquidated.” Id. Rather, the court

have personal knowledge of facts and establish how [he] learned of the facts.” Goins
v. Discover Bank, No. 02-20-00128-CV, 2021 WL 1136077, at *2 (Tex. App.—Fort
Worth Mar. 25, 2021, no pet. h.) (mem. op. on reh’g) (citing Boswell v. Farm & Home
Sav. Ass’n, 894 S.W.2d 761, 768 (Tex. App.—Fort Worth 1994, writ denied)).
Ambrosio explained that he was president and CEO of Tenant, and much of his
affidavit’s factual content was framed in the first person; it was largely a sworn
account of things that he said and did with respect to RPAI, as well as things that
RPAI’s managers said and did in return. Ambrosio’s position and his role in
overseeing these events on Appellants’ behalf establish the basis of his personal
knowledge.

                                          9
concluded, “Mitigation of damages is ordinarily a question of fact for the jury,” 2 and

to create a fact issue for the jury, the defendant need only produce some evidence

“from which the jury can make a reasoned calculation about losses from failure to

mitigate.” Id. at 224, 226. The court held that this standard was satisfied by the

general evidence concerning the cost of the replacement cattle and the value of the

rancher’s herd. Id. at 226.

      Likewise, in this case, Appellants made an imprecise record concerning the

exact amount that RPAI could have mitigated through reasonable efforts. Still, as

with Hygeia, we hold that the evidence is sufficient to give rise to a fact issue on the

defense of failure to mitigate. There was evidence of RPAI’s delinquent efforts to

relet the premises. There was also proof concerning the value and term of the lease,

along with the evidence that if RPAI had acted reasonably with respect to any of the

potential tenants in early 2018, this could have saved nearly two years’ worth of

payments on the lease, to the tune of over $90,000. This is enough to survive

summary judgment. See id.

      Because Appellants have offered evidence sufficient to raise a fact issue on

each element of its failure-to-mitigate defense, summary judgment was improper.

See Am. Petrofina, 887 S.W.2d at 830. We sustain Appellants’ third issue, which renders

it unnecessary to consider Appellants’ second issue.

      2
        See also White v. Harrison, 390 S.W.3d 666, 675 (Tex. App.—Dallas 2012, no
pet.) (“The reasonableness of the landlord’s efforts to avoid damages is an issue for
the fact finder.”).

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                                IV.   CONCLUSION

      We reverse the trial court’s judgment and remand for further proceedings

consistent with this opinion.

                                               /s/ Wade Birdwell

                                               Wade Birdwell
                                               Justice

Delivered: May 27, 2021

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