Reported / Citable
Background
Dolmar leased a 3.5-acre Houston-area tract to Pulice Construction for use as a lay-yard during a highway project. During the lease, Pulice graded the land, placed concrete and asphalt millings, and installed modular offices and a septic system. The parties agree Pulice did not obtain permits for the grading, millings, or concrete slab, but dispute whether permits were required for improvements Pulice says were temporary.
After Pulice’s lease ended, Dolmar leased the property to another tenant. In 2022, City of Houston enforcement actions identified unpermitted improvements and threatened fines. Dolmar ultimately pursued approvals allowing the improvements to remain, a process it says took about two years and cost hundreds of thousands of dollars. Dolmar sued Pulice for breaching lease provisions requiring compliance with law and advance acquisition of required construction permits.
The Court’s Holding
Judge Andrew S. Hanen denied Dolmar’s motion for partial summary judgment. Although the record showed Pulice performed the disputed work without obtaining permits, the court held that a factual dispute remained over whether the City required permits when Pulice performed the work. The municipal code contained an exemption for grading in an isolated, self-contained area that does not endanger the public or adversely affect neighboring property, and neither side submitted definitive City evidence resolving whether that exemption applied.
The court also found factual disputes concerning Pulice’s equitable-estoppel defense. Pulice contends Dolmar told it to leave the grading and asphalt millings in place at the lease’s end; Dolmar disputes that account and maintains the parties intended the improvements to be permanent. The court further concluded that the lease’s notice-and-cure provision was ambiguous as to whether Dolmar had to give Pulice notice and an opportunity to cure before remedying the asserted default and seeking its costs.
Key Takeaways
- Later municipal enforcement did not conclusively establish that Pulice needed permits when it performed the work during the lease term.
- Conflicting evidence about whether improvements were temporary, permanent, or left at Dolmar’s direction barred summary judgment.
- The lease’s notice-and-cure language reasonably supported competing interpretations, making it ambiguous for summary-judgment purposes.
Why It Matters
The decision illustrates the evidentiary burden in lease-based permitting disputes: proof of later code enforcement may be insufficient to establish, as a matter of law, a tenant’s permitting obligation at the time of construction.
It also underscores the importance of clearly allocating responsibility for improvements, removal, notice, cure rights, and remediation costs in commercial leases.