Texas Business Court Decision – October 2, 2026

No. 25-BC08B-0019  Exeter Denton Land, L.P. v. Ariat International, Inc. (Eighth Division, Judge Stagner) 2026 Tex. Bus. 71    25-bc08b-0019-exeter-denton-land-v-ariat-intl-2026-tex-bus-71.pdf

Breach of a Lease.

Background. Ariat leased a 609,000 square-foot warehouse from Exeter for use as a distribution center. The lease contained an “as-is” clause (Sec. 2(a)), but that clause preserved any representation, covenant, or warranty made elsewhere in the lease. Exeter agreed to maintain the footings and foundations (Sec. 9(a)) and  gave an express covenant of quiet possession. Section 24 of the lease  barred liability for lost business or profits and for consequential, punitive, or special damages. After taking possession, Ariat informed Exeter of slab movement and moisture which impacted its material-handling equipment for distribution work. Dissatisfied with Exeter’s response, Ariat declared constructive eviction, vacated the warehouse, and rented another facility. Exeter sued for unpaid rent under the 50-month lease. Ariat counterclaimed for constructive eviction, breach of contract, breach of implied warranty of suitability, and breach of the warranty of quiet enjoyment. Ariat’s expert claimed damages in excess of $53 million. The matter comes before the court on Exeter’s motion for traditional summary judgment on Ariat’s counterclaims. The motion is granted in part and denied in part. No counterclaim is dismissed in its entirety, but several components of Ariat’s requested damages are excluded. The court does not determine at this time whether Exeter breached the lease or whether Ariat was entitled to stop paying rent.

Issues:

1. Whether the “as-is” clause bars Ariat’s counterclaims.
2. Whether the economic-loss rule bars them.
3. Whether Section 24 of the lease barring liability for lost business or profits and for consequential, punitive, and special damages bars Ariat’s claimed damages in whole or in part.

Discussion.

1. The “as-is” clause. The clause preserved Exeter’s express covenants, so it cannot bar the contract, quiet-enjoyment, or constructive-eviction theories. On the implied warranty of suitability claim, the court finds the provisions of the lease are closer to cases where the landlord kept repair responsibility. Exeter did not show waiver as to the components of its retained duties; whether the slab fell with Sec. 9(a) or 9(b) is a disputed fact question not to be decided at this stage of the suit.
2. Economic-loss rule. Under Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716 (Tex. 2014), the suitability warranty exists independently of the lease. The constructive-eviction claim survives under Lazell v. Stone, 123 S.W.3d 6 (Tex. App.-Houston [1stDist.] 2003 pet. denied); the quiet enjoyment claim also survives as Ariat pleaded it as an express covenant, a contract claim; characterization of the claim as one in contract, however, limits the remedies, and this counterclaim will not support tort remedies, including exemplary damages. Further, because the elements of this claim and constructive eviction overlap, Ariat may not recover twice for the same injury.
3. Section 24. This limitation-of-liability section does bar some of Ariat’s claimed losses, but not its entire damages model as the section does not confer blanket immunity from damages. Examining the damages claims: (a) some improvement and installation costs Ariat expended to improve and upgrade the facility for use as an automated distribution center may be recoverable as direct damages; (b) charges related to keeping an idle maintenance crew under contract while the automation project was delayed are unrecoverable consequential damages; (c) the cost of assessing and identifying the conditions the landlord was obligated to repair may constitute direct damages; (d) Section 24 excludes Ariat’s relocation and storage expenses; (e) the additional costs Ariat incurred in fulfilling customer orders are non-recoverable consequential damages; (f) Aria may seek the difference between the market rental value of its existing leasehold and the agreed rent for the remaining term of its lease with Exeter, as these are not lost profits; however, the extent of those damages is determined by the end date of the Exeter lease and cannot be increased based on an assumed extension of that lease.