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BURNETT RANCHES, LTD., et al. and TEXAS CHRISTIAN UNIVERSITY, Appellants v. CANO PETROLEUM, INC., et al., Appellees.

On Motion for Rehearing

BRIAN QUINN, Chief Justice.

Pending before this court is the motion for rehearing filed by Burnett Ranches, Ltd., and Texas Christian University (Burnett). Through it, they assert two allegations. The first involves whether they addressed the summary judgment ground wherein Cano Petroleum, Inc., asserted that since the purported contractual breach was non-remedial, it could not provide basis to terminate the lease. The second encompasses whether they addressed each objection upon which the trial court could have excluded their summary judgment evidence. We overrule the motion for the following reasons.

Regarding the evidentiary matter, we note that the cause has been remanded to the trial court for further proceedings. Given that the judge who granted the summary judgment no longer presides over the 100th Judicial District of Texas, his successor will have the opportunity to address the matters anew. Manon v. Solis, 142 S.W.3d 380, 386 (Tex.App.-Houston [14th Dist.] 2004, pet. denied). Thus, we need not deal with them.

Regarding the contractual matter, the summary judgment ground we alluded to can be read as not implicating Burnett's purported requirement to provide Cano notice and an opportunity to cure before terminating the lease. To reiterate, the lease provision invoked by Burnett to end the contract stated that:

It is further agreed that failure on part of [the lessee] . . . strictly to keep and observe the terms, covenants, conditions, and requirements, or any one of them, on its part to be kept, shall entitle party of the first part or his assigns at his option, at the time of such breach, or at any time thereafter, to terminate this contract and re-enter upon said premises without notice of any kind. Provided, however, that before advantage is taken of any such breach that notice thereof shall be served on party of second part or its agent in charge and reasonable time allowed within which to correct the conditions of which complaint is made.

To defeat Burnett's effort to terminate, Cano asserted numerous grounds in its motion for summary judgment. Through one, it stated that a "one-time event, such as a fire, is not a remediable event and does not support termination under the terms of the lease." Rather, [s]uch event would support, if anything a claim for damages." We interpret this as Cano arguing that irrespective of whether notice and opportunity to cure was afforded, the right to terminate due to a breach does not encompass circumstances like those at bar. Implicit in that argument is the proposition that the clause allegedly applies only to defaults which are susceptible to being cured. If they are not of that ilk, then termination is unavailable, or so the argument would go. And, that particular argument was not addressed by Burnett in its appellate brief.

Consequently, we overrule the motion for rehearing.

Campbell, J., concurs.

JAMES T. CAMPBELL, Justice.

CONCURRING OPINION ON REHEARING

I concur in the overruling of the motion for rehearing filed by Burnett Ranches, Ltd. and Texas Christian University ("Burnett"), and join in the Court's opinion on rehearing as regards the trial court's ruling excluding summary judgment evidence. With respect to Burnett's contention the trial court erred by granting Cano Petroleum, Inc. summary judgment on Burnett's lease termination claim, after considering Burnett's motion for rehearing, I would affirm the summary judgment on its merits.

The Court has quoted the provision of the 1923 lease providing for its termination on the failure of the lessee "strictly to keep and observe the terms, covenants, conditions, and requirements, or any one of them" imposed on the lessee. The lease goes on to provide that "before advantage is taken of any such breach that notice thereof shall be served on [the lessee] and reasonable time allowed within which to correct the conditions of which complaint is made."

Burnett takes the position it met the requirement of notice by serving Cano with its original petition, seeking relief including a declaration the lease was terminated. I disagree with that position, and would hold that the initiation of suit did not meet the lease's plain requirement of notice of its breach and a reasonable time to "correct the conditions" as a prerequisite to termination. Such a reading of the lease honors the language the parties used, and is consistent with settled law disfavoring forfeitures. See, e.g., Sirtex Oil Indus., Inc. v. Erigan, 403 S.W.2d 784 (Tex. 1966). Forfeiture of the lease would be a particularly harsh remedy here, since the breach Burnett asserts is one that is compensable by damages.

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BURNETT RANCHES v. CANO PETRO., 07-07-0321-CV (Tex.App.-Amarillo 6-30-2009)
(Jun 30, 2009)