Preview
CAUSE NO. 2019-25350
BEHAVIORAL HEALTH REALTY, § IN THE DISTRICT COURT
LLC, and BEHAVIORAL HEALTH §
MANAGEMENT, LLC d/b/a §
BEHAVIORAL HOSPITAL OF §
BELLAIRE §
§
V. § HARRIS COUNTY, TEXAS
§
GA HC REIT II BELLAIRE HOSPITAL §
LLC and AMERICAN HEALTHCARE §
INVESTORS LLC § 127th JUDICIAL DISTRICT
Motion to Modify and Clarify Order Granting Summary Judgment
On September 27, 2020 the Court considered the interpretation of a lease between
Plaintiff Behavioral Health Realty, LLC (“Behavioral Health”) and GA HC
REIT II Bellaire Hospital LLC (“Bellaire Hospital”) (Exhibit A, Hearing Tr., June 17,
2020, at 37) The Court adopted a modified summary judgment procedure that permitted
the parties to submit short, contemporaneous motions with limited exhibits. No replies
were permitted because, as the Court stated: “I don’t need a response as to what you think
the other side thinks it reads” ( . at 15). There was no oral argument. The question before
the Court was “[w]ho has to pay for the repairs” to Plaintiff Behavioral Health’s lease space
following Hurricane Harvey. (. at 16).
The Court granted summary judgment for Plaintiffs. Because the parties disagree
the correct interpretation of the order, which impacts discovery and trial, and agree
that at least one party should be removed from the order, Defendants respectfully ask the
Court to modify and clarify the order.
Argument
The order should be modified
Both Plaintiffs moved for summary judgment against both Defendants even though
only one Plaintiff and one Defendant are parties to the lease. Because the summary
judgment procedure did not permit replies or oral argument, Defendants could not raise
before the ed Plaintiffs’ granting relief to both
Plaintiffs against both Defendants (Ex. , Order) But the ease defines the Landlord only
asBellaire Hospital and the Tenantas Behavioral Health. (Ex.
Lease Agreement) Plaintiff Behavioral Health Management, LLC (“Behavioral Health
Management”) and Defendant American Healthcare Investors LLC (“American
) are not parties to the lease.
agree that the Court should remov Defendant American Healthcare from
oppose removing Plaintiff Behavioral Health Management contend it
party beneficiary under the lease. Plaintiffs make that argument in their
motion, nor did they cite any lease provision or legal authority in support of
proposition. The phrase “third party beneficiary” is no even contained in Plaintiffs’
The Court’s order should therefore be modified to remove both Plaintiff
Behavioral Health Management and Defendant American Healthcare.
The order should be clarified
The parties also disagree the correct meaning of the Court’s order and whether
rder addresses both damages (in part). The Court declared that efendants
by the terms of the lease . . .to repair the premises occupied by the
Motion to Modify and Clarify Order Page
plaintiffs at the expense of the defendants,” and (2) their failure to repair the premises “at
defendants’ own expenses” is a default under the lease laintiffs to reimbursement
(Exhibit B, Order)This language quotes (“at its expense”), but not all
the language of Section 14.1. The order does not addresstherest of th
shall, at its expense, use reason efforts to repair or rebuild the
Premises and/or Building, as the case may be, to substantially their former
provided, however, that in no event shall Landlord have any
obligation: () to make repairs or reb uild beyond the extent of insurance
proceeds available to Landlord for such repairs or rebuilding, or (ii) to
repair or rebuild any of Tenant’s personal property, alterations,
additions or improvements to the Premises.
(Ex. B, Lease Agreement § 14.1, bold emphasis added). therefore unclear whether the
Defendants all regard to the limitations in Section
14.1(i) and (ii). Plaintiffs agree the Court did not rule on the limitation in Section 14.1(ii)
(the property that Landlord is not required to repair) or what amounts are owed, but claim
e rejects insuranceproceeds limitation in Section 14.1(i) Defendants disagree
otion contained arguments about Section 14.1
Having not elected to terminate the lease, the Landlord has a mandatory
obligation to repair the premises. (Plaintiffs’ Motion at 3
Section 13.6 of the lease which requires all of Tenant’s insurance to be
is a “general provision” that does not control the Landlord’s obligation
under Paragraph 14, which specifically concerns repairs due to a Casualty . at 4
and the Landlord’s duty to repair “is not limited to the availability of the
defendants insurance.” (
The Tenant has no insurable interest in the leased premises “therefore, only
the defendants’ insurance applies regardless whether it is ‘secondary’ or ‘excess’.”
Motion to Modify and Clarify Order Page
The Court may have accepted one or more of these arguments, but it is not clear, and the
cannot have agreed with all of them because (2) and (3) are inconsistent. Given that
the issue for resolution was supposed to be liability only, Defendants d not understand the
Court’s order to go beyond argument (1). Plaintiffs contend that the rder reflects the
Court’s agreement with arguments (1) (2) (but not (3)) The correct interpretation
impacts whether available insurance proceeds (from one or both ) is a matter
remaining for discovery and trial. Defendants submit that the lease and summary judgment
proof do not support an order granting anything other than argument (1).
’ argument tha insurance is irrelevant regardless of who obtained it,is
argued that the insurance language in Section 14.1(i) relates solely to whether
the Landlord could terminate the lease. (Plaintiffs’ Motion at 9) But s Plaintiffs admit,
termination is governed by a different provision, Section 14.3
Plaintiffs’ Motion at 9; Exhibit C, Lease).
Under Section 14.3(ii) terminate the lease if
inadequate to make required repairs. (Exhibit C, Lease Landlord does not terminate
for that reason, though, it is still entitled under Section 14.1(i) to have its repair obligation
limited to the amount of insurance, just as it would be the Landlord elected
Motion to Modify and Clarify Order Page
not to terminate for any other reason in Section 14.3. For example, if the Landlord did not
terminate under Section 14.3(i) even though repairs could not be completed within six
, under Section 14.1its repair obligation ould still be limited to the amount of
available insurance Plaintiffs’ interpretation fail to give meaning to the language in both
hich Plaintiffs admit is improper. (Plaintiffs’ Motion at 7) (“courts ‘must
consider the entire writing in an effort to harmonize and give effect to all the provisions
of the contract so that none will be rendered meaningless.’”)
s’ other argument that insurance is irrelevant is equally flawed. They claim
Section 13.6 which requires Tenant’s insurance to be primaryis not pertinent because
that section is general, and Paragraph 14 is specific. (Plaintiffs’ Motion at 4
concern Section 13.6 dictates that, if Tenant is required
to have insurance, it must be primaryto the Landlord’s
(Exhibit C, Lease) Paragraph 14 says nothing about insurance obligations or whose policy
is primary just states that whatever insurance proceeds are available, they are relevant
to whether Landlord may terminate the lease, or, if itdoes not terminate, extent of
repair obligation. (Exhibit C, Lease, §§ 14.1(i), 14.3(ii))
For the “specific over general” rule of construction to apply, two provisions must concern
the same topic, with one addressing a situation more specifically than the other. In Forbau v. Aetna
Life Ins. Co., 876 S.W.2d 132, 133 34 (Tex. 1994), cited by Plaintiffs, for example, the court held:
“[W]hen a contract provision makes a general statement of coverage, and another provision
specifically states the time limit for such coverage, the more specific provision will control.”
Motion to Modify and Clarify Order Page
Plaintiffs final argument was alternative: even if Section 13.6 applied, only the
Landlord’s insurance would limit its repair obligation. This argument, too, is wrong and
not supported by the evidence. Plaintiffs claimed they have no insurable interest in the
ents because the improvements allegedly became Landlord’ property upon
termination of the parties’ (Plaintiffs’ Motion at 5 the prior lease
contemplated ownership would transfer the Tenant surrendered the
improvements with the leased premises, which Behavioral Health never did. (Plaintiffs’
Motion, Exhibit C, § 11) (certain property “shall become the property of Landlord and
shall remain upon and with the Leased Premises as a part thereof” at the
termination of the lease.)
Plaintiffs did not submit summary judgment proof showing which
improvements were made under the prior and current leases and were damaged and
Plaintiffs’ motion, itself, suggested some improvements may have occurred
the current lease. (Plaintiffs’ Motion at 2) (“ of the improvements” in
the leased premises were in place at the execution of the lease) (emphasis added). Plaintiffs
had insurance as evidenced by the $1,000,000 declarations page for flood insurance for
the leased premises they attached to their motion. (Plaintiffs’ Motion at 2, n. 6, Exhibit
But there was no evidence regarding whether Behavioral Health made a claim against
or whether any amounts were paid or coverage was denied
At minimum, the Court cannot have agreed with both this argumentthat only
Defendant’s insurance proceeds limit its repair obligationand Plaintiffs’ other
Motion to Modify and Clarify Order Page
that insurance is altogether irrelevant. And the Court’s order does not specify
lease and record, Defendants contend that the Court’s order cannot
properly be read to declare anything more than Defendant Bellaire Hospital had an
obligation to repair the leased premises, subject to the limitations contained in Section
(i) and (ii), and breached the lease by failing to do so. All damage questions, including
available insurance proceeds, should remain issues for discovery and trial.
Conclusion
For the reasons stated, Defendants ask the Court to modify its
September 27, 202 to delete mention of Plaintiff Behavioral Health Management, LLC
ehavioral Hospital of Bellaire and Defendant American Healthcare Investors LLC.
Further, Defendants ask the Court to revise the make clear hat Defendant GA HC
REIT II Bellaire Hospital LLC is obligated under the lease to repair the premises leased
by Plaintiff Behavioral Health Realty LLC and damaged during Hurricane Harvey, but
obligated to make repairs Plaintiff Behavioral Health Realty LLC’s personal
property, alterations, or improvements to the leased premises, or (ii) in amounts exceeding
the insurance proceeds available to Defendant GA HC REIT II Bellaire Hospital LLC for
such repairs or rebuilding.
Motion to Modify and Clarify Order Page
Respectfully submitted,
/s/ Eileen O’Neill
Eileen O’Neill
State Bar No. 15114400
Ware, Jackson, Lee, O’Neill, Smith,
& Barrow, LLP
America Tower, 39 Floor
2929 Allen Parkway
Houston, Texas 77019
713.659.6400
713.659.6262 (fax)
eileenoneill@warejackson.com
Lynn Rothman
State Bar No. 17318500
M. Daniel Guerra
State Bar No. 00793865
Kane, Russell, Coleman, Logan, PC
5051 Westheimer, 10
Houston, Texas 77056
713.425.744
713.425.7700 (fax)
mrothman@krcl.com
dguerra@krcl.com
Attorneys for Defendants
Certificate of Conference
I hereby certify that on December consulted with opposing counsel
and they are not opposed to modifying the order to remove Defendant American
Healthcare, but are otherwise opposed.
/s/ Eileen O Neill
Neill
Motion to Modify and Clarify Order Page
Certificate of Service
I hereby certify that on December 3, 2020, true and correct copies of the foregoing
document were served on counsel service through efiletexas.gov and via email
Joel W. Mohrman
Matt D. Manning
McGlinchey Stafford
1001 McKinney, Suite 1500
Houston, Texas 77002
morhman@mcglinchey.com
mmanning@mcglinchey.com
/s/ Eileen O’Neill
Eileen O’Nei
Motion to Modify and Clarify Order Page
Preview
CAUSE NO. 2019-25350 BEHAVIORAL HEALTH REALTY, § IN THE DISTRICT COURT LLC, and BEHAVIORAL HEALTH § MANAGEMENT, LLC d/b/a § BEHAVIORAL HOSPITAL OF § BELLAIRE § § V. § HARRIS COUNTY, TEXAS § GA HC REIT II BELLAIRE HOSPITAL § LLC and AMERICAN HEALTHCARE § INVESTORS LLC § 127th JUDICIAL DISTRICT Motion to Modify and Clarify Order Granting Summary Judgment On September 27, 2020 the Court considered the interpretation of a lease between Plaintiff Behavioral Health Realty, LLC (“Behavioral Health”) and GA HC REIT II Bellaire Hospital LLC (“Bellaire Hospital”) (Exhibit A, Hearing Tr., June 17, 2020, at 37) The Court adopted a modified summary judgment procedure that permitted the parties to submit short, contemporaneous motions with limited exhibits. No replies were permitted because, as the Court stated: “I don’t need a response as to what you think the other side thinks it reads” ( . at 15). There was no oral argument. The question before the Court was “[w]ho has to pay for the repairs” to Plaintiff Behavioral Health’s lease space following Hurricane Harvey. (. at 16). The Court granted summary judgment for Plaintiffs. Because the parties disagree the correct interpretation of the order, which impacts discovery and trial, and agree that at least one party should be removed from the order, Defendants respectfully ask the Court to modify and clarify the order. Argument The order should be modified Both Plaintiffs moved for summary judgment against both Defendants even though only one Plaintiff and one Defendant are parties to the lease. Because the summary judgment procedure did not permit replies or oral argument, Defendants could not raise before the ed Plaintiffs’ granting relief to both Plaintiffs against both Defendants (Ex. , Order) But the ease defines the Landlord only asBellaire Hospital and the Tenantas Behavioral Health. (Ex. Lease Agreement) Plaintiff Behavioral Health Management, LLC (“Behavioral Health Management”) and Defendant American Healthcare Investors LLC (“American ) are not parties to the lease. agree that the Court should remov Defendant American Healthcare from oppose removing Plaintiff Behavioral Health Management contend it party beneficiary under the lease. Plaintiffs make that argument in their motion, nor did they cite any lease provision or legal authority in support of proposition. The phrase “third party beneficiary” is no even contained in Plaintiffs’ The Court’s order should therefore be modified to remove both Plaintiff Behavioral Health Management and Defendant American Healthcare. The order should be clarified The parties also disagree the correct meaning of the Court’s order and whether rder addresses both damages (in part). The Court declared that efendants by the terms of the lease . . .to repair the premises occupied by the Motion to Modify and Clarify Order Page plaintiffs at the expense of the defendants,” and (2) their failure to repair the premises “at defendants’ own expenses” is a default under the lease laintiffs to reimbursement (Exhibit B, Order)This language quotes (“at its expense”), but not all the language of Section 14.1. The order does not addresstherest of th shall, at its expense, use reason efforts to repair or rebuild the Premises and/or Building, as the case may be, to substantially their former provided, however, that in no event shall Landlord have any obligation: () to make repairs or reb uild beyond the extent of insurance proceeds available to Landlord for such repairs or rebuilding, or (ii) to repair or rebuild any of Tenant’s personal property, alterations, additions or improvements to the Premises. (Ex. B, Lease Agreement § 14.1, bold emphasis added). therefore unclear whether the Defendants all regard to the limitations in Section 14.1(i) and (ii). Plaintiffs agree the Court did not rule on the limitation in Section 14.1(ii) (the property that Landlord is not required to repair) or what amounts are owed, but claim e rejects insuranceproceeds limitation in Section 14.1(i) Defendants disagree otion contained arguments about Section 14.1 Having not elected to terminate the lease, the Landlord has a mandatory obligation to repair the premises. (Plaintiffs’ Motion at 3 Section 13.6 of the lease which requires all of Tenant’s insurance to be is a “general provision” that does not control the Landlord’s obligation under Paragraph 14, which specifically concerns repairs due to a Casualty . at 4 and the Landlord’s duty to repair “is not limited to the availability of the defendants insurance.” ( The Tenant has no insurable interest in the leased premises “therefore, only the defendants’ insurance applies regardless whether it is ‘secondary’ or ‘excess’.” Motion to Modify and Clarify Order Page The Court may have accepted one or more of these arguments, but it is not clear, and the cannot have agreed with all of them because (2) and (3) are inconsistent. Given that the issue for resolution was supposed to be liability only, Defendants d not understand the Court’s order to go beyond argument (1). Plaintiffs contend that the rder reflects the Court’s agreement with arguments (1) (2) (but not (3)) The correct interpretation impacts whether available insurance proceeds (from one or both ) is a matter remaining for discovery and trial. Defendants submit that the lease and summary judgment proof do not support an order granting anything other than argument (1). ’ argument tha insurance is irrelevant regardless of who obtained it,is argued that the insurance language in Section 14.1(i) relates solely to whether the Landlord could terminate the lease. (Plaintiffs’ Motion at 9) But s Plaintiffs admit, termination is governed by a different provision, Section 14.3 Plaintiffs’ Motion at 9; Exhibit C, Lease). Under Section 14.3(ii) terminate the lease if inadequate to make required repairs. (Exhibit C, Lease Landlord does not terminate for that reason, though, it is still entitled under Section 14.1(i) to have its repair obligation limited to the amount of insurance, just as it would be the Landlord elected Motion to Modify and Clarify Order Page not to terminate for any other reason in Section 14.3. For example, if the Landlord did not terminate under Section 14.3(i) even though repairs could not be completed within six , under Section 14.1its repair obligation ould still be limited to the amount of available insurance Plaintiffs’ interpretation fail to give meaning to the language in both hich Plaintiffs admit is improper. (Plaintiffs’ Motion at 7) (“courts ‘must consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless.’”) s’ other argument that insurance is irrelevant is equally flawed. They claim Section 13.6 which requires Tenant’s insurance to be primaryis not pertinent because that section is general, and Paragraph 14 is specific. (Plaintiffs’ Motion at 4 concern Section 13.6 dictates that, if Tenant is required to have insurance, it must be primaryto the Landlord’s (Exhibit C, Lease) Paragraph 14 says nothing about insurance obligations or whose policy is primary just states that whatever insurance proceeds are available, they are relevant to whether Landlord may terminate the lease, or, if itdoes not terminate, extent of repair obligation. (Exhibit C, Lease, §§ 14.1(i), 14.3(ii)) For the “specific over general” rule of construction to apply, two provisions must concern the same topic, with one addressing a situation more specifically than the other. In Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 34 (Tex. 1994), cited by Plaintiffs, for example, the court held: “[W]hen a contract provision makes a general statement of coverage, and another provision specifically states the time limit for such coverage, the more specific provision will control.” Motion to Modify and Clarify Order Page Plaintiffs final argument was alternative: even if Section 13.6 applied, only the Landlord’s insurance would limit its repair obligation. This argument, too, is wrong and not supported by the evidence. Plaintiffs claimed they have no insurable interest in the ents because the improvements allegedly became Landlord’ property upon termination of the parties’ (Plaintiffs’ Motion at 5 the prior lease contemplated ownership would transfer the Tenant surrendered the improvements with the leased premises, which Behavioral Health never did. (Plaintiffs’ Motion, Exhibit C, § 11) (certain property “shall become the property of Landlord and shall remain upon and with the Leased Premises as a part thereof” at the termination of the lease.) Plaintiffs did not submit summary judgment proof showing which improvements were made under the prior and current leases and were damaged and Plaintiffs’ motion, itself, suggested some improvements may have occurred the current lease. (Plaintiffs’ Motion at 2) (“ of the improvements” in the leased premises were in place at the execution of the lease) (emphasis added). Plaintiffs had insurance as evidenced by the $1,000,000 declarations page for flood insurance for the leased premises they attached to their motion. (Plaintiffs’ Motion at 2, n. 6, Exhibit But there was no evidence regarding whether Behavioral Health made a claim against or whether any amounts were paid or coverage was denied At minimum, the Court cannot have agreed with both this argumentthat only Defendant’s insurance proceeds limit its repair obligationand Plaintiffs’ other Motion to Modify and Clarify Order Page that insurance is altogether irrelevant. And the Court’s order does not specify lease and record, Defendants contend that the Court’s order cannot properly be read to declare anything more than Defendant Bellaire Hospital had an obligation to repair the leased premises, subject to the limitations contained in Section (i) and (ii), and breached the lease by failing to do so. All damage questions, including available insurance proceeds, should remain issues for discovery and trial. Conclusion For the reasons stated, Defendants ask the Court to modify its September 27, 202 to delete mention of Plaintiff Behavioral Health Management, LLC ehavioral Hospital of Bellaire and Defendant American Healthcare Investors LLC. Further, Defendants ask the Court to revise the make clear hat Defendant GA HC REIT II Bellaire Hospital LLC is obligated under the lease to repair the premises leased by Plaintiff Behavioral Health Realty LLC and damaged during Hurricane Harvey, but obligated to make repairs Plaintiff Behavioral Health Realty LLC’s personal property, alterations, or improvements to the leased premises, or (ii) in amounts exceeding the insurance proceeds available to Defendant GA HC REIT II Bellaire Hospital LLC for such repairs or rebuilding. Motion to Modify and Clarify Order Page Respectfully submitted, /s/ Eileen O’Neill Eileen O’Neill State Bar No. 15114400 Ware, Jackson, Lee, O’Neill, Smith, & Barrow, LLP America Tower, 39 Floor 2929 Allen Parkway Houston, Texas 77019 713.659.6400 713.659.6262 (fax) eileenoneill@warejackson.com Lynn Rothman State Bar No. 17318500 M. Daniel Guerra State Bar No. 00793865 Kane, Russell, Coleman, Logan, PC 5051 Westheimer, 10 Houston, Texas 77056 713.425.744 713.425.7700 (fax) mrothman@krcl.com dguerra@krcl.com Attorneys for Defendants Certificate of Conference I hereby certify that on December consulted with opposing counsel and they are not opposed to modifying the order to remove Defendant American Healthcare, but are otherwise opposed. /s/ Eileen O Neill Neill Motion to Modify and Clarify Order Page Certificate of Service I hereby certify that on December 3, 2020, true and correct copies of the foregoing document were served on counsel service through efiletexas.gov and via email Joel W. Mohrman Matt D. Manning McGlinchey Stafford 1001 McKinney, Suite 1500 Houston, Texas 77002 morhman@mcglinchey.com mmanning@mcglinchey.com /s/ Eileen O’Neill Eileen O’Nei Motion to Modify and Clarify Order Page