NO. 07-07-0373-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL E
OCTOBER 31, 2008
______________________________
DION’S OF TEXAS, INC. ,
Appellant
v.
SHAMROCK ECONOMIC DEVELOPMENT CORPORATION,
Appellee
________________________________
FROM THE 31ST DISTRICT COURT OF WHEELER COUNTY;
NO. 11,576; HON. JOHN T. FORBIS, PRESIDING
_______________________________
Memorandum Opinion
_______________________________
Before QUINN, C.J., CAMPBELL, J. and BOYD, S.J.1
Dion’s of Texas, Inc. (Dion’s) appeals from a final summary judgment rendered in
favor of Shamrock Economic Development Corporation (Shamrock) for past rent and
termination of a lease. Through six issues, it contests the propriety of the judgment. Each,
however, involves the alleged option to purchase realty Shamrock granted Dion’s in the
1 John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignm ent. T E X . G O V ’T
C OD E A N N . §75.002(a)(1) (Vernon 2005).
lease agreement. Furthermore, Dion’s claimed to have exercised the option before
Shamrock terminated the lease. We affirm the judgment.
Background
Shamrock and Dion’s entered into a lease agreement in January 1994 for a building
owned by Shamrock. The lease term was seven years with an option to renew for an
additional eight years if Dion’s was not in default. In addition to receiving a monthly credit
towards the rentals (which depended upon the number of employees hired), Dion’s also
received via the lease “an exclusive right of first refusal to purchase the premises.” The
latter could be exercised at any time during the term of the lease by written notice.
Moreover, the purchase price was liquidated at $240,000, which price would be reduced
by the lease payments which were made including the job credits mentioned above.
At the end of the initial term, the parties renewed the lease per the same terms
effective January 2001. Eventually, the lessee defaulted in its rental payments.
Consequently, Shamrock sued it, on July 14, 2004, seeking $10,000 in past rent and
repossession of the premises. The suit remained pending for several years before Dion’s
attempted to exercise the option to purchase via a letter sent on May 9, 2006. Shamrock
responded by informing Dion’s, by letter dated May 15, 2006, that it considered the lease
terminated for non-payment of rent, non-payment of taxes, non-payment of insurance, and
other violations.
On May 26, 2006, Dion’s filed a counterclaim in which it conceded being “in default
in the payment of the full rent required for 2003, 2004, 2005, and through this date in
2006.” However, it also sought specific performance of the right to purchase. This led
Shamrock to amend its petition to allege that 1) Dion’s also defaulted in paying the property
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taxes and insuring the premises, 2) $38,000 was due in past rentals, and 3) the lease had
terminated. Thereafter, it filed a motion for summary judgment seeking to have judgment
rendered on its amended petition.
In turn, Dion’s amended its counterclaim to add demands for reformation of the
lease and for a construction of the contract as it pertained to the credits it purportedly
earned through the years. So too did it move for summary judgment. The trial court
denied Dion’s motion for summary judgment, granted that of Shamrock, awarded
Shamrock $32,598 in past rent,2 and declared the lease terminated.
Termination of the Lease
No one questions whether the lease vested Shamrock with the authority to terminate
it upon default by Dion’s and notice by Shamrock. No one questions that Dion’s failed to
perform various duties imposed by the lease or that Shamrock notified Dion’s in writing of
the defaults and of its intent to terminate the lease per the lease terms. Dispute arises as
to whether Dion’s exercised its option to purchase before Shamrock terminated the
agreement. According to Dion’s, if it did, then there was no lease to terminate.
The option in question read:
In consideration of the execution of this lease agreement,
LESSOR hereby grants to LESSEE, an exclusive right of first refusal to
purchase the premises. This option may be exercised by LESSEE at any
time during the term of this lease by written notice to LESSOR. This option
shall be irrevocable during the period of this lease agreement or any renewal
and extension hereof, and will expire on termination of the lease agreement,
or any renewal thereof, without notice to LESSEE.
2
Dion’s conceded in its response to Sham rock’s m otion for sum m ary judgm ent that it owed that
am ount in past due rentals.
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(Emphasis added). In reading this provision, the words we italicized give us pause. They
do not speak of a unilateral right to buy at anytime. Rather, the verbiage describes a “right
of first refusal.” As such, the right granted Dion’s the opportunity to buy the land and facility
if Shamrock decided to sell it. See Abraham Inv. Co. v. Payne Ranch, Inc., 968 S.W.2d
518, 524 (Tex. App.–Amarillo 1998, pet. denied); National Adv. Co. v. Potter, No. 01-06-
01042-CV, 2008 Tex. App. LEXIS 2462 at *8-9 (Tex. App.–Houston [1st Dist.] April 3, 2008,
pet. denied) (defining a right of first refusal as a preemptive or preferential right of purchase
giving one party the first opportunity to buy property before it can be sold to another).
Unlike a true option, one holding the preemptive right cannot force an unwilling landowner
to sell. Riley v. Campeau Homes, Inc., 808 S.W.2d 184, 187 (Tex. App.–Houston [14th
Dist.] 1991, writ dism’d). And, until the landowner decides to sell, one with a right to first
refusal has nothing to exercise. Id.; see Abraham Inv. Co. v. Payne Ranch, Inc., 968
S.W.2d at 524-25 (stating that the preferential right ripens into an option at the moment the
property owner gives notice of his intent to sell). So, before Dion’s could buy the realty at
issue, Shamrock must first have attempted or at least intended to sell it.3 Id. And, we find
nothing in the lease or language used by the parties to render the provision and its effect
ambiguous.
3
Dion’s suggests in its brief that whether the language in question gave it an option to buy was never
raised below. W hile it is true that a sum m ary judgm ent can only be affirm ed or reversed on grounds stated
in the m otion for sam e, Speck v. First Evangelical Lutheran Church of Houston, 235 S.W .3d 811, 818 (Tex.
App.–Houston [1 st Dist.] 2007, no pet.), we cannot but conclude that the issue was before the trial court. This
is best illustrated by analogy. Before one can secure a sum m ary judgm ent collecting upon a prom issory note,
he m ust first show that a valid note existed. Sim ply put, there can be no recovery if there is no note. The
sam e is no less true here. Dion’s could not unilaterally buy the property without the consent of Sham rock if
it had no such right. So, it was obligated to prove that it had the entitlem ent it claim ed it had in order to
recover upon its m otion for sum m ary judgm ent.
4
Next, Dion’s cites us to no evidence of record evincing an attempt by Shamrock to
sell the land. Nor are we cited to any evidence suggesting that the owner intended or
desired to sell the property prior to the time Dion’s opted to buy it. Nor did our own search
of the record fill the void. Without that evidence, Dion’s did not prove, as a matter of law,
that it had an option to buy in the manner that it did before Shamrock ended the lease.
Thus, the trial court did not err in entering summary judgment declaring that the lease had
terminated.
The issue of termination is dispositive, and our resolution of it frees us from having
to address the remaining contentions in appellant’s brief. Consequently, we affirm the
summary judgment rendered by the trial court.
Brian Quinn
Chief Justice
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