Basic Capital Management, Inc. v. Dynex Commercial, Inc.
Supreme Court of Texas
348 S.W.3d 894 (Tex. 2011)
Basic Capital Management (plaintiff) managed real estate investment trusts American Realty Trust (ART) and Transcontinental Realty Investors (TCI), which held property through bankruptcy-remote entities called SABREs. TCI took a $37 million construction loan from Dynex Commercial (defendant), and separately Basic committed to Dynex that it would propose additional ART- and TCI-owned SABREs to borrow up to $160 million more over two years. After Dynex funded the initial loan, rising interest rates led it to refuse further funding and to abandon the $160 million commitment altogether. ART and TCI, though not signatories to the commitment agreement, sued Dynex for breach.
Whether a third party may recover under a contract when the contract clearly expresses an intent to benefit that third party.