In re Eldercare Properties Ltd
O’CONNOR, Associate Justice (Retired):
These consolidated appeals concern the vitality of the lease of a nursing home facility, Valley Grand Manor. The lessor, Valley Educational Foundation (“VEF”), argues that it validly terminated the lease in June 2005, before the lease’s primary term expired. It also argues that if the lease survived the attempted termination, the lessee, ElderCare Properties Ltd. (“ElderCare”), failed effectively to exercise its option to renew the lease for an additional five-year term and that the lease consequently expired in December 2006. ElderCare argues that VEF never effectively terminated the lease. As to its failure strictly to comply with the lease’s renewal terms, ElderCare contends that Texas common law principles of equitable intervention render its renewal effective.
The dispute has unfolded in the course of ElderCare’s Chapter 11 bankruptcy. The issue whether the lease was validly terminated arose when ElderCare’s bankruptcy estate moved to assume the lease in order to reorganize for the sole purpose of continuing to operate the nursing home. The United States Bankruptcy Court for the Southern District of Texas sided with ElderCare and allowed it to assume the lease, concluding that the lease had not been terminated. The court also ordered the parties to mediate certain ongoing lease terms. While the mediation process unfolded, ElderCare failed to provide timely notice of its intent to renew the lease, and VEF later sought to evict ElderCare,







