Affirmed and Memorandum Opinion filed March 24, 2009.
In The
Fourteenth Court of Appeals
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NO. 14-05-00519-CV
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RIKU MELARTIN AND DAJO, INC., Appellants
V.
CR&R, INC., Appellee
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Cause No. 2003-00464
M E M O R A N D U M O P I N I O N
Appellants Riku Melartin and Dajo, Inc., appeal from a judgment in favor of appellee CR&R, Inc. following a bench trial. Melartin and Dajo contend that (1) the trial court committed reversible error by filing untimely findings of fact and conclusions of law; (2) the evidence is legally and factually insufficient to support the trial court=s findings that (i) the leased premises were not totally destroyed by fire, and (ii) CR&R properly accelerated rent payments due; and (3) the trial court=s damages calculation failed to credit Melartin and Dajo for an $8,000 security deposit paid to CR&R. We affirm.
Background
Melartin signed a commercial lease with CR&R on August 1, 1999 for premises located at 5920 Bellaire Boulevard in Houston. The lease term ran from August 1, 1999 to July 31, 2004. Melartin signed a sublease with Dajo on August 2, 1999 for the same premises. Melartin purchased all of Dajo=s stock in August 1999. Under the terms of the main lease and sublease, Dajo promised to comply with all of Melartin=s obligations and liabilities under the main lease. The main lease and the sublease defined the leased premises as a parcel of real property described by metes and bounds and a frame building consisting of approximately 3,000 square feet located thereon.
Rent under the main lease began at $8,000 per month. The main lease called for annual increases in the monthly rent computed according to a formula contained within the lease. The main lease also stated that failure to timely pay rent or other payments due under the lease constituted default unless cured within 10 days of written notice to the lessee. In the event of default, Article 14.02(a) of the main lease provided that CR&R could terminate the lease; retake possession of the leased premises; and recover (1) unpaid rent due at the time of termination plus interest thereon, (2) any other amounts necessary to compensate lessor for all of the detriment proximately caused by lessee=s failure to perform, and (3) the sum equal to the total remaining unpaid rent for the unexpired portion of the term and all other payments lessee would have been required to pay under the lease for the same period. Article 2.05 of the main lease required Melartin to pay an $8,000 security deposit to CR&R Acoincident with the issuance of a letter of intent regarding the execution@ of the main lease. Melartin paid CR&R this security deposit. Article 2.05 also gave CR&R the right to apply any part of the security deposit to cure any default of the lessee. CR&R had authority under Article 2.05 to Ause and apply or retain the whole or any part of the security to the extent required for the payment of any rent, additional rent, or any other sum or debt as to which the Lessee is in default.@
Article 12.02 of the main lease, entitled ATotal Destruction,@ addressed damage or destruction of the leased premises. Article 12.02 of the main lease states that if the leased premises Ashould be totally destroyed by fire . . . or if it should be so damaged by such a cause that rebuilding or repairs cannot reasonably be completed within [60] working days and at a cost not to exceed [$200,000], this lease shall terminate, and rent shall be abated . . . .@ Article 12.03, entitled APartial Destruction,@ did not provide for automatic abatement of rent if the leased premises were damaged but could reasonably be repaired within 60 working days and at a cost of no more than $200,000.[1]
Melartin and Dajo ceased paying rent to CR&R after November 2001. A fire damaged the leased premises on June 13, 2002. Melartin and Dajo gave written notice to CR&R about the fire as required by the main lease on June 14, 2002. On June 21, 2002, CR&R=s accountant, Luther Henderson, gave written notice to Melartin and Dajo that they were in default of the main lease for failure to pay rent for the period from December 2001 to June 2002, and that the matter was being turned over to CR&R=s owner, Leroy Christiansen.
Henderson testified that he told Melartin and Dajo before the fire that they were in arrears, but he was unable to specify when he gave notice to Melartin and Dajo. Henderson testified that the June 21, 2002 notice was the first written contact notifying Melartin and Dajo of their failure to pay rent and the need to cure default. Henderson also testified that no late fees were assessed to Melartin and Dajo before the lawsuit, and that rent was not accelerated until after the June 13, 2002 fire.
CR&R sued Melartin and Dajo in Harris County district court on January 6, 2003. CR&R sold the leased premises to a third party in July 2003. The case was tried to the court on November 8, 2004, after the parties waived a jury trial. At the time of trial, CR&R=s live pleadings asserted claims for (1) breach of contract stemming from Melartin=s and Dajo=s failure to pay rent and late fees and to maintain insurance on the leased premises with CR&R as a named insured; (2) negligent misrepresentation based on Melartin=s and Dajo=s representation that they had insured the premises and named CR&R as an insured; and (3) fraud based on Melartin=s and Dajo=s representation that they had insured the premises and named CR&R as an insured.
CR&R sought damages at trial for unpaid rent plus 18 percent interest and taxes for the period from December 2001 through March 2004. Both parties tried the case based upon the formula found in Article 12.02 that required $200,000 in damage to the leased premises before the obligation to pay rent would abate. The record indicates that the trial court also applied this formula in deciding the case.
To establish that the obligation to pay rent had not been abated under Article 12.02 due to the fire, CR&R introduced as evidence a repair estimate of $185,108.64 for fire damage to the building located on the leased premises. Because this amount was less than the $200,000 threshold, CR&R contended that the leased premises had not been totally destroyed and that the obligation to pay rent had not been abated.
Dajo introduced documentary evidence that its business personal property loss as a result of the June 13, 2002 fire was $147,929.10. Melartin testified at trial that it would cost approximately $103,000 to replace the interior features of the business located on the leased premises. Adding these sums to CR&R=s $185,108.64 repair estimate, Melartin and Dajo argued that the $200,000 threshold under the Article 12.02 formula had been satisfied.
The trial court signed a judgment in favor of CR&R on January 31, 2005, awarding actual damages of $247,640.38. Melartin and Dajo appeal from this judgment.
Melartin and Dajo timely filed a request for findings of fact and conclusions of law with the trial court on February 21, 2005. On March 22, 2005, Melartin and Dajo timely filed a notice of past due findings of fact and conclusions of law. Melartin and Dajo filed a notice of appeal on May 16, 2005.[2] The trial court signed findings of fact and conclusions of law on June 16, 2005, and they were filed the same day.
The trial court found that (1) the leased premises were not totally destroyed under Article 12.02; and (2) CR&R properly accelerated rent payments due. The trial court also found that CR&R was entitled to recover actual damages of $247,640.38 caused by Melartin=s and Dajo=s breach of contract, negligent misrepresentation, and fraud.
Analysis
Melartin and Dajo contend on appeal that the trial court=s failure to make timely findings of fact and conclusions of law constitutes reversible error. Melartin and Dajo further contend that the evidence is legally and factually insufficient to support the trial court=s findings that (1) the leased premises were not totally destroyed by the June 13, 2002 fire; and (2) CR&R properly accelerated rent payments due. Melartin and Dajo also contend that the trial court erred by not reducing the damages awarded to CR&R by $8,000 to reflect credit for their security deposit.
I. Untimely Findings of Fact and Conclusions of Law
Melartin and Dajo ask this court to reverse the trial court=s judgment based upon the trial court=s failure to file timely findings of fact and conclusions of law under Texas Rule of Civil Procedure 297.
After a bench trial in a district court, any party may request the court to state in writing its findings of fact and conclusions of law. Tex. R. Civ. P. 296. Such a request must be filed within 20 days after the judgment is signed. Id. The trial court must file its findings of fact and conclusions of law within 20 days after a timely request is filed. Tex. R. Civ. P. 297. If the trial court fails to file timely findings of fact and conclusions of law, the requesting party must file a notice of past due findings of fact and conclusions of law within 30 days after filing the original request. Id. Upon filing this notice, the time for the court to file findings of fact and conclusions of law is extended to 40 days after the original request was filed. Id.
In computing time prescribed or allowed by the Texas Rules of Civil Procedure, the day of the event after which the designated time period begins to run is not counted. Tex. R. Civ. P. 4. The last day of any period longer than five days so computed is to be included unless it is a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day which is not a Saturday, Sunday, or legal holiday. Id.
The trial court signed its final judgment on January 31, 2005. Melartin and Dajo had until February 20, 2005 to file their request for findings of fact and conclusions of law. See Tex. R. Civ. P. 296. Because February 20, 2005 was a Sunday, the deadline to file was extended until February 21, 2005 _ the date on which Melartin and Dajo filed their request. See Tex. R. Civ. P. 4. Thus, the original request for findings of fact and conclusions of law was timely. See id.
After the trial court failed to file findings of fact and conclusions of law, Melartin and Dajo had until March 23, 2005 _ 30 days after filing their original request _ to file a notice of past due findings of fact and conclusions of law. See Tex. R. Civ. P. 297. Melartin and Dajo timely filed this notice on March 22, 2005. See id. Once this notice was filed, the trial court was required to file findings of fact and conclusions of law by April 2, 2005. See id. The trial court did not sign and file its findings of fact and conclusions of law until June 16, 2005.
If proper presentation of a case on appeal is prevented by a trial court=s failure to make requested findings of fact and conclusions of law, the proper remedy is to abate the appeal and direct the trial court to make findings and conclusions pursuant to Texas Rule of Appellate Procedure 44.4(b). Acad. Corp. v. Interior Buildout & Turnkey Constr., Inc., 21 S.W.3d 732, 739 n.1 (Tex. App._Houston [14th Dist.] 2000, no pet.). Here, no purpose would be served by abatement because the trial court corrected its failure to act by filing findings of fact and conclusions of law on June 16, 2005. We can consider the late-filed findings and conclusions on appeal. See In re Gillespie, 124 S.W.3d 699, 703 (Tex. App._Houston [14th Dist.] 2003, orig. proceeding) (en banc) (AThus, even if a trial court=s plenary power has expired, the trial court is not prevented from entering properly requested findings and conclusions.@). Melartin and Dajo were not prejudiced by the trial court=s delay because the findings of fact and conclusions of law were on file almost three months before they filed their original appellate brief.
We overrule Melartin=s and Dajo=s issue regarding the trial court=s untimely filing of findings of fact and conclusions of law.
II. Legal and Factual Sufficiency
Melartin and Dajo challenge the legal and factual sufficiency of the evidence to support the trial court=s findings on the breach of contract claim. Melartin and Dajo contend that insufficient evidence supports the finding that the leased premises were not totally destroyed by the June 13, 2002 fire so as to abate appellants= obligation to pay rent. Melartin and Dajo also challenge the legal and factual sufficiency of the evidence to support the finding that CR&R properly accelerated rent payments due under the main lease.
We need not address these arguments because the trial court=s findings of fact and conclusions of law establish that the judgment in favor of CR&R was based not only on its breach of contract claim, but also on its negligent misrepresentation and fraud claims. The negligent misrepresentation and fraud findings are not challenged on appeal. When a separate and independent ground that supports the trial court=s judgment is not challenged on appeal, we must affirm the judgment. Page v. Hulse, No. 14-06-00731-CV, 2007 WL 2127717, at *3 (Tex. App._Houston [14th Dist.] July 26, 2007, pet. denied) (mem. op.).
Furthermore, alternative unchallenged bases for the trial court=s finding of breach of contract also exist. In addition to the failure to pay rent, the trial court found that appellants breached the main lease by failing to (1) obtain appropriate insurance coverages under the lease; (2) pay a five percent penalty for each month of delinquent rental payments; (3) notify CR&R that they had changed insurance coverage; and (4) relinquish control of the leased premises when specifically requested. These unchallenged findings establish further alternative bases for affirming the trial court=s judgment. See id.
We overrule Melartin=s and Dajo=s issue regarding legal and factual sufficiency of the evidence to support the trial court=s findings that (1) the leased premises were not totally destroyed by fire; and (2) CR&R properly accelerated rent payments due under the main lease.
III. Failure to Credit Melartin and Dajo for Security Deposit
Melartin and Dajo contend that the trial court erred by failing to offset the damages awarded to CR&R by $8,000 to reflect credit for their security deposit. Melartin and Dajo did not plead offset as an affirmative defense before trial, raising the issue only after the trial court awarded damages to CR&R.
The right of offset is an affirmative defense, and the burden of pleading it and of proving facts necessary to support it are on the party making the assertion. Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex. 1980); see also Tex. R. Civ. P. 94. The failure to plead offset forecloses review of this argument. See Brown, 601 S.W.2d at 936.
We overrule Melartin=s and Dajo=s issue regarding the asserted failure of the trial court to offset the damages awarded to CR&R by the amount of the security deposit.
Conclusion
The trial court=s judgment is affirmed.
/s/ William J. Boyce
Justice
Panel consists of Justices Frost, Brown, and Boyce.
1 In their reply brief, Melartin and Dajo argue for the first time that Article 12.02 provides for abatement of rent if the leased premises is Atotally destroyed by fire@ regardless of whether Arebuilding or repairs cannot reasonably be completed within [60] working days and at a cost not to exceed . . . [$200,000].@ At trial and in their opening brief, Melartin and Dajo treated the two measures found in Article 12.02 as one and the same. We do not consider arguments raised for the first time in a reply brief. See Zamarron v. Shinko Wire Co., 125 S.W.3d 132, 139 (Tex. App._Houston [14th Dist.] 2003, pet. denied); Tex. R. App. P. 38.3. We also do not consider the following arguments raised by Melartin and Dajo for the first time in their reply brief: (1) CR&R=s failure to rebuild within 60 days constitutes a breach of contract; (2) Melartin and Dajo were not required to insure the leased premises; and (3) CR&R breached the lease by failing to honor Melartin=s and Dajo=s right of first refusal before selling the property to a third party. See Zamarron, 125 S.W.3d at 139; Tex. R. App. P. 38.3.
2 Dajo filed for bankruptcy on November 3, 2005, and an order was issued on December 22, 2005, abating the appeal in this case. See 11 U.S.C. _ 362 (2000). Appellants filed a motion to reinstate the appeal on October 10, 2008, and amended this motion on October 14, 2008. Appellants= motion was granted and an order was issued reinstating the appeal on October 16, 2008.