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Contracts Keyed to Murphy
Bernstein v. Nemeyer
Facts
Plaintiff and Defendants entered into a partnership agreement when Plaintiffs invested $1,050,000.00 to renovate two apartment buildings in Houston, Texas. As part of the agreement, Defendants, made a negative cash flow guaranty. They promised to lend the partnership any money it required, to cover operating costs, beyond cash receipts. The guaranty was limited in time and scope and the agreement provided that Defendants would get their money back out of the sale of the two buildings. Defendants did not keep their agreement. The partnership could not meet its operating costs, their lenders foreclosed on them, and the parties lost their entire investment. Plaintiffs sued Defendants for breach of contract and restitution. The trial court ruled in favor if Defendants, because the court determined Defendants breach of the guaranty agreement was not material.
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