The Law

Assignment a Mutual Mistake by Ron Davis Ownership of a Texas shopping center is at last resolved, but not before a legal clash between prospective purchasers. The shopping center, located on Seawall Boulevard in Galveston, became the target of the legal dispute shortly after its owner offered to sell the property at auction. The high bidder at that auction was Four Seasons Food Distributors, which eventually tendered more than $300,000 in earnest money toward the purchase. As part of the sales transaction agreement, Four Seasons pledged that it would not assign its rights of purchase without written consent of the seller/owner. As it turned out, however, Four Seasons decided not to purchase the shopping center, and, seemingly against the wishes of the center’s owner, assigned its purchase rights to another company. The center’s owner, PMCF Properties, stated that it would not consent to such an assignment. Four Seasons reacted to that decision by electing, as originally planned, to purchase the shopping center. As a consequence, the potential buyers sued Four Seasons for breach of promise. Four Seasons countered that, among other reasons, any breach is “excused by mutual mistake.” That left the courts to determine whether a breach of promise occurred and, if so, such a breach should be excused “by mutual mistake.” At trial, a Texas judge granted Four Seasons’ request for a decision in its favor (but without specifying particular grounds for such a judgment.) As expected, the hopeful buyer challenged each of the reasons that the court would have granted judgment in favor of Four Seasons. Moreover, the potential buyer objected to the judge’s order limiting a response to the grounds that Four Seasons offered. That response, the hopeful buyer added, would focus on whether the assignment agreement was or was not invalid. According to that response, “Four Seasons and the center’s owner could not rely on the terms of the contract with [the center’s owner], much less [depend on] a breach of that [sales] contract.” Finally, it was pointed out on appeal to a higher court, “Nothing in a contract between [the center’s owner] and Four Seasons—a contract to which [the potential buyer] was not a party—can limit the potential buyer’s rights and remedies against Four Seasons under the contract between them.” Added the court, [The potential buyer] misses the mark because this case involves an assignment, not a sublease.” (Jetall Companies, Inc. v. Four Seasons Food Distributors, Inc., 2014 WL 6601213 [Tex.App.-Hous. 14 Dist.]) Decision: November 2014 Published: November 2014