Friendswood company sues landlord for violating lease agreement

John Suayan, Galveston Bureau Aug. 12, 2008, 11:22am

GALVESTON � A Friendswood-based mass communication and information retrieval company is suing the owners of its office building for what it believes is blatant fraud and negligent misrepresentation in the execution of a lease agreement.

The lawsuit was filed in Galveston County District Court before the 122nd District Court on Aug. 8.

Household Drivers Report Inc. accuses Thomas and Penelope Burke of Friendswood of dishonoring the terms of a 2004 contract between the three.

The company argues that the Burkes promised they would sell the entire property to Household Drivers Report some time during the first year of the lease, but have failed to fulfill that obligation.

Court papers say HDR, located in the 900 block of South Friendswood Drive, was in the process of looking for a new place to conduct business in an effort to "eliminate the necessity of future moves" when its landlords, the Burkes, approached the company with an offer.

"The Burkes offered to renew HDR's lease in the building, but to a different suite, requiring HDR to move from its then-present first floor suite, to the second floor of the building," they explain."To overcome HDR's expressed desire to make the next move its last, the Burkes represented to HDR that if it would enter into a new lease, and move its operations upstairs, the Burkes would allow HDR the right to purchase the building within the first year of the lease should the new space prove acceptable to HDR."

HDR, which was in the midst of talks with several other potential sellers at the time, ultimately favored what the Burkes presented and decided to ink a new deal with them.

"In reliance on the Burkes' representation to HDR that it could purchase the building in the future, HDR decided to terminate its negotiations with a potential seller of property, and enter a new lease with the Burkes," the suit says.

It adds HDR signed a lease and option agreement prepared by the Burkes in January 2004. A clause in the contract "expressly provided that HDR could purchase the building, within the first year of the lease, for the purchase price of $300,000."

"In reliance on this purchase option, HDR invested significant sums to make modifications to the second-floor space, adding electrical and air conditioning capacity, bringing natural gas connectivity to the back of the building for new emergency power generating equipment and replicating its enormous database and server network in the new space to accommodate the move," court documents state.

HDR claims it promptly exercised its option to buy the building so it would not have to relocate in the future, but "the Burkes inexplicably refused to sell the building to the company despite the purchase option."

The plaintiff, represented by Houston attorney Susan E. Cates, seeks exemplary damages and has requested for a jury trial.

Judge John Ellisor is presiding over the case.

Case No. 08CV0850

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