Cadillac Bar Thwarted by Waiver/Quasi-Estoppel

In 1998, the McNutt Group leased one of its properties in downtown Dallas to Landry’s Crab Shack for a 20-year term.  Ten years later, Landry’s assigned its lease to Cadillac Bar, in accordance with the lease provisions that allowed such an assignment.  As part of the transaction, McNutt signed an estoppel certificate, thereby giving its consent to the assignment.  Cadillac Bar paid rent for a year, but then stopped.  McNutt sued Landry’s and Cadillac Bar for breach, and Landry’s sued Cadillac Bar.  Each of the parties moved for summary judgment, which the court (1) granted with respect to McNutt; (2) denied with respect to Cadillac Bar; and (3) did not rule on with respect to Landry’s.  Cadillac Bar appealed.

On appeal, Cadillac Bar argued that Landry’s couldn’t assert a breach of contract claim because the parties didn’t perform all the conditions associated with the assignment, and thus there was no assignment in the first place.  Specifically, Cadillac Bar claimed that McNutt conditioned his assent to the assignment on (1) having the estoppel certificate signed by all parties and (2) his receipt of attorney fees, neither of which ever actually happened.  The court of appeals rejected this argument, holding that the Cadillac Bar could not take advantage of conditions McNutt had imposed on his own consent to the assignment because those conditions were for McNutt’s sole benefit.  Thus, the court found that “Cadillac Bar cannot avoid its own obligations under the Lease by identifying what is, at most, McNutt’s waived injury.”  The court also explained that the doctrine of quasi-estoppell also thwarted Cadillac Bar’s argument.  Under this doctrine, Cadillac Bar couldn’t now assert that an assignment never occurred when, previously, it had benefited from the assignment.

Cadillac Bar v Landry’s