Judge Sofia Androgué
The Business Court [11th Division] has rejected a purported real estate purchaser’s claim of entitlement to specific performance after the sale fell through at the last minute.
City Choice Group, LLC v. TMC Grand Blvd Land Company, LLC and BCEGI Grand Blvd Manager, LLC (No. 24-BC11A-0002; 2025 Tex. Bus. 45; November 8, 2025) arose from an agreement to purchase about 20 acres of land located in the Houston Medical Center for $22.5 million. The agreement granted the purchaser, City Choice, a unilateral right to terminate the agreement during a designated inspection period. Upon such termination, City Choice would forfeit $100,000 of its earnest money to the seller, TMC. Otherwise, the parties agreed to close the sale within 15 days following the termination of the inspection period, which was set to expire at midnight on July 1, 2024. On June 26, however, a City Choice representative emailed TMC’s broker to demand a $500,000 price reduction to account for the costs of asbestos remediation and compliance with the city’s water detetention requirements. The broker immediate notified TMC. Two days later City Choice again emailed the broker, copying a TMC employee, communicating further about the city’s detention requirements and requesting an extension of the inspection period.
On the afternoon of July 1, TMC sent City Choice a proposed amendment to the agreement to extend the inspection period and give TMC the right to terminate the contract if TMC’s board did not approve City Choice’s requested price reduction. City Choice responded by deleting the clause granting TMC the right to terminate. If TMC chose not to agree, City Choice would terminate the agreement. Midnight came and went with no response from TMC. TMC assumed that City Choice had terminated the agreement and refused to close the sale. But City Choice insisted that it hadn’t terminated the agreement and moved forward to closing. None of the communications leading up to this point “facially” complied with the agreement, which specified the names and email addresses of parties required to receive communications or notices. City Choice filed suit in the Business Court on September 4, seeking specific performance of the agreement, attorney’s fees, and the release of a lis pendens that had been filed on the property. TMC subsequently filed a third-party petition against City Select Title, which included a claim for money had and received (the earnest money that it now claimed pursuant to the alleged termination). In January TMC filed its first motion seeking declarations consistent with a finding that City Choice had terminated the agreement, followed by a second motion in July seeking instant return of its earnest money.
In an opinion by Judge Androgué, the court granted TMC’s motion for partial summary judgment and denied TMC’s motion for summary judgment against City Select for release of the earnest money. The purchase and sale agreement gave City Choice a unilateral right to terminate the agreement during the inspection period “for any or no specific reason.” In the hours before expiration of the inspection period, City Choice had the option to sign TMC’s proposed amendment to the agreement but instead countered with a revised form of the amendment. The revised amendment stated that if TMC didn’t sign and return the amendment, City Choice’s termination notice became effective. When TMC didn’t respond, City Choice’s termination notice, although conditional, was “nevertheless clear and unequivocal.” City Choice tried to argue that its termination right “constituted an exercise of an option” and that the agreement should be interpreted under the strick compliance standard applicable to option contracts. Even if the agreement in this case could be interpreted as an option contract, the court observed, “City Choice’s exercise of its rights under [the agreement] (the termination provision) is clearly not the acceptance or exerciseof any option contained within the [agreement.]” Rather than applying the strict compliance standard, the court applied a substantial compliance standard applicable to contractual written notice requirements. City Choice substantially complied with the termination notice because “the notice of termination was effective and conformed with the conduct between the parties in communication regarding the [agreement],” and its “deviation from the contractual notice conditions did not severely impair the purpose underlying those conditions and caused no prejudice.”
The court held further that City Choice, having “explicitly tendered a ‘notice to teriminate the Agreement’ under [the termination provision], cannot obtain specific performance of the agreement. The court indicated that it would find it unconscionable to compel TMC to sell its property to City Choice after City Choice clearly terminated the contract. It thus agreed with TMC’s assertion of a quasi-estoppel defense, which “precludes a party from asserting, to another’s disadvantage, a right inconsistent with a position previously taken.”
Turning to TMC’s second motion seeking an immediate pre-judgment release of the earnest money, the court looked to §§ 61.001-61.005, CPRC, the statutory requirements for a writ of attachment. TMC, however, failed to comply with those requirements, i.e. TMC did not file an application for a writ of attachment with the required supporting evidence. TMC argued that it was entitled to the money regardless of whether the purchase and sale agreement terminated. The court thus denied the motion, leaving TMC either to follow the proper procedure for a writ of attachment or to wait for a final judgment.
