Cheung-Loon, LLC v. Cergaon, Inc

Cheung-Loon, LLC v. Cergaon, Inc., 392 S.W.3d 738 (Tex.App.--Dallas 2012, no pet.) involved a tenant who claimed the lessor of a parking lot had breached the parties' lease. Id. at 740. The lessee ran a restaurant and leased an adjacent parking lot for its patrons. Id. It became upset when the lot was being used to its exclusion by other tenants of the same lessor. Id. The lease required that both parties must provide notice in writing and an opportunity to cure any potential breach. Id. at 741. The lessee had provided oral notice to the lessor of the parking issue to no avail, but not written notice. Believing the lessor to be in default under the terms of the lease, the lessee stopped paying rent, leading to the lawsuit. Id. at 742. The lessee prevailed in the trial court, obtaining a summary judgment in its favor. Id. at 743. The trial court rejected the lessor's position that because the lessee never provided written notice of a failure to perform, along with the thirty day opportunity to cure, it could not claim a right to rescission. Id. The appellate court reversed, noting that the lessee bore the burden of showing that all conditions precedent to its recovery under the contract were met. Id. at 744-45. The court of appeals held that "absent a repudiation by the lessor, the lessee was required to provide it . . . with notice of the alleged default and an opportunity to cure." Id. at 745. In Cergaon, the lessee in fact argued that "it was unnecessary . . . to provide notice of default because any such notice would have been futile." 392 S.W.3d at 745. On the summary judgment record before it, the court held the lessee "introduced no evidence . . . of any conduct by the lessor occurring before the lessee terminated the lease that would indicate the futility of a demand for performance." Id. at 745.