Opinion
No. 05-16-00960-CV
04-19-2017
THE ESTATE OF DONNA CATHERINE MACDONALD; DIANA MACDONALD, INDIVIDUALLY; COMPASS BANK, AS TRUSTEE OF THE RUTH JONES MACDONALD MATERIAL DEDUCTION TRUST UNDER THE WILL OF R.D. MACDONALD, JR. COMPASS BANK, AS TRUSTEE OF THE DIANA MOORE RESIDUARY TRUST, ET AL., Appellants v. REEDER ROAD SAF-T-LOC, LLC, Appellee
On Appeal from the 134th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-13-11296
MEMORANDUM OPINION
Before Justices Lang, Fillmore, and Schenck
Opinion by Justice Lang
The underlying lawsuit was brought by Reeder Road Saf-T-Loc, LLC against appellants for declaratory relief and damages respecting an alleged breach of a lease agreement ("Ground Lease"). Appellants initiated this proceeding before us by filing their lengthy "Notice of Appeal or, Alternatively Request to Permit Petition for Mandamus" on August 9, 2016 in which they complained that the trial court erred by rendering its "Second Order to Abate." This Second Order to Abate abated the case and ordered the parties to engage in a dispute resolution process that was different from that provided for in their Ground Lease. Appellants contend this Court has jurisdiction to dissolve the Second Order to Abate, by deeming their petition to be either an interlocutory appeal of a temporary injunction or a petition for writ of mandamus.
Appellants are a series of charitable trusts referred to as "The MacDonald Trusts."
We conclude we have jurisdiction in this case to consider mandamus relief. Further, we conditionally grant mandamus relief and direct the trial court to vacate the Second Order to Abate. This case is remanded for further proceedings consistent with this opinion. Because the law to be applied in this case is well settled, we issue this memorandum opinion. See TEX. R. APP. P. 47.2, 47.4.
I. Factual and Procedural Context
Appellants own real property in Dallas County which they lease to appellee pursuant to the Ground Lease. On July 11, 2007, the State of Texas filed an eminent domain action to condemn a portion of the land which is the subject of the Ground Lease. This action resulted in a settlement between appellants and the State of Texas as set out in an Agreed Judgment awarding appellants $1,325,000.00 ("condemnation award"). This suit arose after the Agreed Judgment was rendered, when the parties to this appeal could not agree how to apportion the condemnation award under the terms of the Ground Lease.
The parties do agree Paragraph 12(a) of the Ground Lease governs the potential apportionment of the award between appellants and appellee. The paragraph provides:
12. Condemnation. (a) In the event the Leased Premises and the Improvements, or any portion thereof, shall be taken in or by or shall be sold to any person having the power of condemnation or other eminent domain in anticipation that the same shall be taken in or by, condemnation or other eminent domain proceedings pursuant to any law general or special, and in the event Lessor and Lessee cannot agree upon how the award shall be divided between them within ninety (90) days after such an award is made, then, so long as Lessee is not in default under this Lease, any award payable in connection with such taking less any expenses incurred in connection with collecting such award, shall be held in trust by a mutually agreed upon third party for the benefit of Lessor and Lessee and subsequently divided between and disbursed to Lessor and Lessee as their interest may be determined in the manner hereafter provided without considering any termination of this Lease that may occur as provided for in sub-paragraph (b) of this Paragraph 12. hereof next below. The determination of the respective interests of Lessor and Lessee in any such trust fund shall be made by an independent appraiser selected by the then
parties to this Lease. If such parties cannot agree on such a person to act as an independent appraiser, then each of the parties hereto shall select one person to act as an appraiser, which person shall be a member of the American Institute of Real Estate Appraisers or its successor organization or if such organization or its successor organization is not then in existence, then a person recognized as a professional real estate appraiser, and the third appraiser shall be selected by the two (2) appraisers so selected by the parties hereto. If the two (2) appraisers so selected by the parties hereto are unable to agree on a third appraiser, or if either party hereto fails to so select an appraiser within thirty (30) days of a notice from the other party hereto, an appraiser or appraisers shall be appointed by the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, acting as an individual and not in his judicial capacity. The finding of such independent appraiser or such panel of appraisers (which shall act by vote of the majority), as the case may be, shall be a final and conclusive determination of the respective interests of Lessor and Lessee in any such trust fund. The cost of any such determination of the parties' interest in such trust fund shall be borne equally by the parties hereto.
(emphasis added).
Appellee filed its suit in the court below on September 19, 2013 seeking, among other things, a "declaration of rights and construction of Paragraph 12," that appellants "be compelled to follow the procedure implemented by Paragraph 12," and damages for breach of Paragraph 12(a). Appellants answered by filing a general denial and asserted several affirmative defenses and counterclaims. At least after appellee filed its suit, the parties were not able to agree on an independent appraiser to apportion the condemnation award. By August 7, 2015, the trial court had granted partial summary judgments for both sides.
In their Fifth Amended Answer and Counterclaims appellants asserted the following affirmative defenses: laches, waiver, res judicata, statute of limitations, failure to mitigate, statute of frauds, failure of a condition precedent, and impossibility.
Appellants asserted counterclaims for breach of contract and declaratory relief.
On November 24, 2015, the trial court, sua sponte, issued an order referred to by appellants as the "first abatement order." That order abated the proceedings, ordered the parties to request "the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division" to appoint an appraiser or appraisers, and further ordered the parties to file that request with the trial court. The parties complied by sending the letter.
The first abatement order read:
Based upon the evidence before the court, both the Plaintiffs and Defendants are Ordered to contact the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, in his individual capacity and not in his judicial capacity and request an appointment of an appraiser or appraisers pursuant to the parties agreement of the 1st day of September, 1977, a copy of which is attached hereto and hereby incorporated by reference the same as if fully set forth verbatim herein.
The parties are further ordered to file with the Court, not later than thirty (30) days from the date of this Order, the parties joint request for appointment of an appraiser or appraisers, by the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, as provided by the attached agreement of the parties.
The parties are further ordered to file the response of the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, upon receipt of such response.
All proceedings in this matter are abated until the directives of this Order are performed and a response by the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, is filed with this Court.
All other relief nor granted in this Order is DENIED.
Then, on December 29, 2015, the parties filed with the trial court a letter in which the clerk of the federal court advised that there is "no corresponding title of any judge in the Houston Division of the Southern District of Texas." The clerk further stated in the letter that "no federal judge in [the] district could agree to act in the capacity requested by the parties" in this case.
The trial court set aside the first abatement order and reinstated the case by rendering its "Order Reinstating Case" on May 26, 2016. At that time, several motions for summary judgment remained pending before the trial court. However, on July 20, 2016, the trial court rendered an order, sua sponte, entitled the "Second Order to Abate." This Second Order to Abate again abated the case and ordered the Appraisal Institute to "appoint an appraiser or a panel of appraisers, not to exceed three (3) in number, to finally and conclusively determine the respective interests" of the parties. The parties acknowledge the second abatement order was not sought by motion or other pleading filed by either party.
The court's "Second Order to Abate" read:
The Court finds the following:
1) A portion of the leased premises, which is the subject of this action, has been taken by a person having power of condemnation or other eminent domain pursuant to law general or special;
2) Lessor and Lessee could not agree upon how the award should be divided between them within ninety (90 days) of the award;
3) Lessee is not in default under the lease;
4) The award payable in connection with the taking, less expenses incurred in connection with the collection of such award, has not been held in trust and instead has been held by, and maintained under the exclusive control of, the Lessor because the Lessor and Lessee did not mutually agree upon a third party to hold the funds in trust;
5) The determination of the respective interests of Lessor and Lessee in the award has not been made by an independent appraiser because the Lessor and Lessee could not agree upon such a person to act as an independent appraiser;
6) Lessor has failed to select an appraiser within thirty (30) days of a notice from Lessee;
7) There is no person who serves as the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division;
8) The designation of the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division, acting as an individual and not in his judicial capacity was a mutual covenant of the parties for the purpose of obtaining an objective, neutral, disinterested, and unbiased entity to select independent appraisers to provide a final and conclusive determination on the respective interests of Lessor and Lessee in the award;
9) The Appraisal Institute is an objective, neutral, disinterested, and unbiased entity as it relates to the Lessor's and Lessee's respective interest in the award which is the subject of this litigation.
IT IS THEREFORE ORDERED that the Appraisal Institute shall appoint an appraiser or a panel of appraisers, not to exceed three (3) in number, to finally and conclusively determine the respective interests of Lessor and Lessee in the award.
The parties are FURTHER ORDERED to file with the Court, not later than thirty (30) days from the date of this Order, the parties joint request for appointment of an appraiser or appraisers, as provided by the attached agreement of the parties, substituting the Appraisal Institute to perform the duties assigned to the Senior Judge of the United States District Court for the Southern District of Texas, Houston Division in the attached agreement which is hereby incorporated in this ORDER the same as if fully set forth herein.
IT IS THEREFORE ORDERED that the cost of any such determination of Lessor's and Lessee's interest in such award shall be borne equally by the Lessor and Lessee.
The parties are further ORDERED to file the response of the Appraisal Institute, upon receipt of such response, with this court.
The parties are further ORDERED to provide the Appraisal Institute with a copy of this ORDER.
All proceedings in this matter are ABATED until the directives of this Order are performed and a response by the Appraisal Institute is filed with this Court.
All other relief not granted in this Order is DENIED.
SIGNED on July 20, 2016.
The Appraisal Institute is referred to in Paragraph 12(a) of the Ground Lease as the "American Institute of Real Estate Appraisers."
II. The Effect of the "Second Order to Abate" on the Parties' Agreement
In a single issue, appellants contend that the trial court's "decision to re-write the parties' Ground Lease and order them to engage in an extra-judicial binding administrative and unprecedented procedure to resolve this action in accordance with the process newly-concocted by the court, is a clear abuse of discretion justifying mandamus relief." Further, they argue the trial court's Second Order to Abate "effectively granted summary judgment to Appellee on its disputed breach of contract claim and awarded a remedy of specific performance in the form of . . . requiring the parties to undertake a binding dispute resolution procedure . . . to which they have never agreed, and to which the [appellants] object as inappropriate given the eight years of litigation between these parties and the factual circumstances now presented."
Appellee responds arguing that "the trial court's order is amply supported and correctly buttressed or substantiated by its reasoned, well-grounded findings." Further, appellee asserts that "equitable relief of specific performance is both just and right given Appellants' protracted, willful, and egregious disregard of the Ground Lease provision."
A. Standard for Granting Mandamus
"Mandamus is an extraordinary remedy that is available only in limited circumstances." In re Am. Homes for Rent Props. Eight, LLC, 498 S.W.3d 153, 155 (Tex. App.—Dallas 2016, orig. proceeding) (citing CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996) (orig. proceeding)); see TEX. GOV'T CODE ANN. § 22.221 (West 2010). "In order to obtain mandamus relief, relators must show both that the trial court has abused its discretion and that they have no adequate appellate remedy." In re Oncor Elec. Delivery Co. LLC, 355 S.W.3d 304, 306 (Tex. App.—Dallas 2011, orig. proceeding) (citing In re Prudential Ins. Co., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig. proceeding)).
"A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if it clearly fails to analyze the law correctly or apply the law correctly to the facts." In re Am. Homes for Rent Props. Eight, LLC, 498 S.W.3d at 155 (citing In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding)). "Whether there is an adequate remedy on appeal is determined by the facts and circumstances of each case." In re Moore, No. 05-14-01173-CV, 2016 WL 80205, at *6 (Tex. App.—Dallas Jan. 7, 2016, orig. proceeding). "If a remedy on appeal would be adequate, then mandamus relief is not appropriate because any alleged error in the trial court's order could be corrected on appeal." Id. (citing In re Prudential Ins. Co. of Am., 148 S.W.3d at 136). However, "[m]andamus review of significant rulings in exceptional cases may be essential to preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings." In re Prudential Ins. Co., 148 S.W.3d at 136.
B. Application of Law to the Facts
Appellants contend the trial court abused its discretion by "improperly rewrit[ing] the parties' agreement." On this record, we conclude the trial court abused its discretion by rendering the Second Order to Abate.
The parties agreed to the dispute resolution process described in Paragraph 12(a) of the agreement. They do not argue the terms of Paragraph 12(a) were indefinite and ambiguous.
Paragraph 12(a) provides the parties were to first attempt to agree upon an appraiser to apportion the condemnation award. They could not agree. However, the parties do agree that the Appraisal Institute, ordered by the trial court to designate an appraiser or a panel of appraisers, (1) is not a party to the trial court proceeding, (2) has not appeared in the trial court in any capacity, and (3) is not identified in any way in the lease as an entity that could itself choose an appraiser to resolve the dispute of the parties.
Our case law respecting a trial court's modification of arbitration and mediation agreements is instructive. "Courts do not rewrite contracts." In re Lennar Homes of Tex. Sales & Mktg., Ltd., No. 02-15-00174-CV, 2015 WL 4366046, at *3 (Tex. App.—Fort Worth July 15, 2015, orig. proceeding) (mem. op.) (the trial court abused its discretion by not enforcing the parties' agreement to order mediation administered by the AAA, and, instead, ordering mediation with the trial court's chosen mediator or another mediator to which the parties could agree). Further, "[a] trial court abuses its discretion if its orders regarding enforcement of the parties' arbitration agreement contradict the agreement itself." In re M.W.M., Jr., A Minor Child, No. 05-16-00797-CV, 2017 WL 1245422, at *5 (Tex. App.—Dallas Apr. 5, 2017, orig. proceeding) (the trial court abused its discretion by removing the arbitrator named in the parties' agreement and appointing another arbitrator). On this record, we conclude the trial court abused its discretion by ordering a dispute resolution process which is not in accordance with the terms of the parties' agreement.
Next, we address appellants' contention that they have no adequate remedy by appeal. Appellee concedes that the Second Order to Abate directs "the Appraisal Institute [to] finally and conclusively determine the respective interests" of the parties in the award. However, appellee urges that "an apportionment process is mandated" and that the lack of opportunity to appeal is precisely what the parties contemplated, since their "remedies, claims, and rights are not subject to determination by a jury or judge, but rather are only cognizable through the apportionment/arbitration by professional arbitrators . . . ."
As noted above, appointment of the Appraisal Institute to choose the appraisers was not in accordance with the parties' contract. We concluded in, In re M.W.M., that "[a]ppeal is an inadequate remedy when a trial court improperly designates an arbitrator or otherwise denies a party its contracted-for arbitration rights." In re M.W.M., Jr., A Minor Child, 2017 WL 1245422, at *3 (citing In re Serv. Corp. Int'l, 355 S.W.3d 655, 658, 661-62 (Tex. 2011) (orig. proceeding); Austin Commercial Contractors, L.P. v. Carter & Burgess, Inc., 347 S.W.3d 897, 901-02 (Tex. App.—Dallas 2011, pet. denied, orig. proceeding)); see also In re Lennar Homes of Tex. Sales & Mktg., Ltd., 2015 WL 4366046, at *3-4 ("Although the contractual right before us at this time is the appointment of AAA as mediator instead of the appointment of AAA as arbitrator, the underlying principle that courts are not to rewrite contracts remains the same."). The Texas Supreme Court has instructed as to the adequacy of the appellate remedy that, "[e]ven if [appellants] could somehow obtain reversal based on the denial of its contractual right, it would already have lost a part of it by having been subject" to a procedure to which it did not agree. See In re Prudential Ins. Co., 148 S.W.3d at 138. The Fort Worth court of appeals has similarly determined, "There is no adequate remedy by appeal when a party is erroneously denied its contracted-for rights." In re Lennar Homes of Tex. Sales & Mktg., Ltd., 2015 WL 4366046, at *4. On this record we conclude appellants have no adequate remedy by appeal.
III. Conclusion
We conditionally grant appellants' petition for writ of mandamus. We order the trial court to issue a written ruling vacating the July 20, 2016 Second Order as directed herein within 14 days of the date of this opinion. A writ will issue only if the trial court fails to comply with this opinion and the order of this date.
/Douglas S. Lang/
DOUGLAS S. LANG
JUSTICE 160960F.P05