Background
Two restaurants—Joe’s Crab Shack and Saltgrass Steak House—occupied adjacent parcels in Humble, Texas and shared a parking lot. Both were originally owned by Landry’s, Inc. In 2006, before selling Joe’s, Landry’s executed a Reciprocal Easement Agreement (the “Agreement”) between the two restaurants. The Agreement required each owner to obtain the other’s express written consent before constructing new buildings or altering building footprints on their parcel.
In 2019, Eastex purchased the Joe’s property and leased it to BJ’s Brewery and Alehouse, which sought to demolish the vacant restaurant and build a new one. BJ’s requested approval from Saltgrass on September 24, but Saltgrass rejected the request on October 10. BJ’s then claimed approval was deemed granted because Saltgrass failed to specify reasons for denial within 15 days. Saltgrass disputed both the procedural validity of the request (arguing only Eastex, not BJ’s, could request approval) and the substantive merits.
Eastex sued for a declaratory judgment that the Agreement permitted the construction and for breach of contract damages. The district court ruled for Saltgrass. After the Fifth Circuit reversed on the declaratory judgment claim and remanded for additional factfinding, the district court again granted summary judgment for Saltgrass.
The Court’s Holding
The Fifth Circuit affirmed summary judgment for Saltgrass, holding that the Agreement unambiguously required written approval before any demolition or construction. Although the Agreement’s language appeared facially ambiguous, the court found that uncontroverted extrinsic evidence resolved the ambiguity. Steven Scheinthal, the Landry’s executive who drafted and executed the Agreement for both parties, testified that the “whole purpose” of the relevant provision was to give both entities business judgment to either allow or prevent any demolition or construction affecting the other parcel. His intent was to prevent construction disruptions from creating a “war zone” that would threaten the neighboring restaurant’s commercial and aesthetic value.
The court held that because Scheinthal was the sole drafter and executor for both parties, his uncontroverted testimony about intent was dispositive. Where extrinsic evidence is undisputed and resolves an ambiguity, contract interpretation remains a question of law for the court rather than a jury question. The court emphasized that no inference was required—the source of intent was in the record, uncontroverted, and identified.
The court also noted two independent textual bases for Saltgrass’s interpretation: first, the Agreement’s approval procedure required the property owner (Eastex) to seek approval, not the lessee (BJ’s), making BJ’s request procedurally defective; second, the provision’s language proscribing “any new building” and alteration of any building’s “footprint” was not limited to construction affecting easements.
Key Takeaways
- Undisputed extrinsic evidence can resolve contract ambiguity as a matter of law, even when the contract language appears to present a jury question, if the evidence comes from the drafter who executed the contract for both parties.
- Procedural compliance matters: a lessee’s request for approval cannot substitute for the property owner’s request, even if the substantive approval issue is disputed.
- Courts will not send ambiguous contracts to a jury when the drafter’s uncontroverted testimony establishes the parties’ shared intent.
- A notice of appeal must specifically reference the issues being appealed; omitted issues cannot be reviewed on appeal.
Why It Matters
This decision clarifies an important principle in contract law: the tension between treating ambiguous contracts as jury questions and allowing summary judgment when extrinsic evidence definitively resolves the ambiguity. The Fifth Circuit holds that when the contract drafter testifies uncontrovertedly about the parties’ intent, that testimony is conclusive and summary judgment is appropriate—even if the contract language could reasonably support another interpretation.
For practitioners, the opinion underscores the critical importance of procedural compliance in exercising contractual rights and approvals. It also carries practical implications for businesses: the court noted the parties could have avoided six years of litigation through negotiated resolution, highlighting the value of commercial compromise over protracted disputes. The decision confirms that Texas courts will look to the parties’ actual intent, particularly when evidenced by the person who drafted the agreement, rather than engaging in abstract linguistic interpretation.