Estoppel Bars Specific Performance After Termination Notice, Even With Substantial Compliance
Read the Court's Opinion (PDF)
Judge Sofia Adrogué
In City Choice Group v. TMC Grand Blvd Land Co., Judge Adrogué granted partial summary judgment holding that City Choice, having delivered an unequivocal termination notice during the inspection period of a $22.5 million land purchase agreement, was estopped from seeking specific performance of the contract it purported to terminate—even though it substantially complied with notice provisions and the termination was not subject to strict compliance standards applicable to option exercises. The court separately denied TMC's motion for pre-judgment release of $100,000 in independent consideration held in escrow, ruling that TMC must comply with statutory requirements for a writ of attachment rather than seeking immediate release.
Court Staff Summary
Granting Defendant/Counter-Plaintiff/Third-Party Plaintiff TMC's Traditional Motion for Partial Summary Judgment on Termination against Plaintiff/Counter-Defendant City Choice. Although City Choice’s termination notice was clear and unequivocal; its tender of its termination notice was not the exercise or acceptance of an option, and is therefore, not subject to the “strict compliance” standard applicable to the exercise or acceptance of options; and it substantially complied with notice provisions in exercising its right to terminate, it estopped from obtaining specific performance of the contract it purported to terminate. Denying TMC's Motion for Summary Judgment Against Third Party Defendant City Select Title for Release of the Independent Consideration. TMC does not seek a simple declaration from this Court that TMC is entitled to receipt of the Independent Consideration at the execution of the final judgment in this case. Instead, TMC seeks the immediate (i.e., pre-judgment) release of the Independent Consideration. But it must instead comply with the statutory requirements for a writ of attachment.
Background: Medical Center Land Deal and Termination Dispute
On May 1, 2024, TMC Grand Blvd Land Company agreed to sell 20.38 acres in the Houston Medical Center to City Choice Group for $22.5 million. The Purchase and Sale Agreement (PSA) gave City Choice a unilateral right to terminate during an "Inspection Period" ending at midnight on July 1, 2024, "for any or no specific reason," forfeiting only $100,000 of its earnest money deposit as "Independent Consideration." On July 1 at 4:46 PM—hours before the inspection period expired—City Choice's representative Jonathan Wasserberg emailed TMC's broker a proposed amendment and stated: "If you cannot sign and return to me, then this email serves as our notice to terminate the Agreement." When TMC did not respond by midnight, the inspection period ended. TMC subsequently refused to close, treating the PSA as terminated, while City Choice claimed it remained ready to perform and sought specific performance.
The Termination and Estoppel Issue
The central dispute turned on whether City Choice effectively terminated the PSA and, if so, whether it could nevertheless seek specific performance. Judge Adrogué's June 6, 2025 order granted TMC's motion for partial summary judgment on termination. The court found that although City Choice's termination notice was "clear and unequivocal" and City Choice "substantially complied with notice provisions in exercising its right to terminate," City Choice was "estopped from obtaining specific performance of the contract it purported to terminate." Critically, the court determined that City Choice's termination notice "was not the exercise or acceptance of an option, and is therefore, not subject to the 'strict compliance' standard applicable to the exercise or acceptance of options." This distinction mattered because Texas courts apply heightened scrutiny to option exercises, requiring strict compliance with contractual terms. Here, the substantial compliance standard applied—but estoppel principles nonetheless barred City Choice from repudiating its own termination.
The Independent Consideration Escrow Dispute
TMC separately moved for summary judgment against third-party defendant City Select Title, seeking immediate release of the $100,000 Independent Consideration held in escrow. The PSA provided that upon termination during the inspection period, the Independent Consideration would be "paid to [TMC]." Judge Adrogué denied this motion, explaining that "TMC does not seek a simple declaration from this Court that TMC is entitled to receipt of the Independent Consideration at the execution of the final judgment in this case. Instead, TMC seeks the immediate (i.e., pre-judgment) release of the Independent Consideration." The court held that TMC "must instead comply with the statutory requirements for a writ of attachment" to obtain pre-judgment release of funds held by a third party. This ruling reinforces that even when a party may ultimately be entitled to escrowed funds, obtaining them before final judgment requires following Texas's attachment procedures rather than seeking summary declaratory relief.
Significance for Texas Commercial Practice
This opinion provides important guidance on three fronts. First, it clarifies that termination rights in commercial purchase agreements are distinct from option contracts and are not subject to the strict compliance standard—substantial compliance with notice provisions suffices. Second, and more significantly, it establishes that a party cannot hedge its bets by purporting to terminate a contract and then seeking specific performance when market conditions change or the counterparty's response proves unfavorable. The estoppel holding prevents gamesmanship in commercial transactions where one party attempts to preserve optionality after delivering what the court found to be an unequivocal termination notice. Third, the escrow ruling reminds practitioners that contractual entitlement to funds does not automatically permit pre-judgment release; statutory attachment procedures govern, even in the Business Court. For deal lawyers drafting purchase agreements, the opinion underscores the importance of clear termination mechanics and the risks of conditional or ambiguous termination notices that might later be characterized as equivocal.