The Leasing Hotline

TRIAL COURT DISCRETION

Absent an abuse of discretion, an appellate court will not disturb a trial court's decision regarding damages and attorneys' fees; it is within the trial court's discretion to deny a motion for leave to file a counterclaim where the defendant was aware that the claim existed at the time of the commencement of the action and at the time its answer was filed. RCH Co. v. 3-J Machining Service, No. 82671, Ohio Ct. App., Jan. 8, 2004.

RCH leased premises to 3-J for 3-J to operate a machine shop. Thereafter, 3-J failed to make rent payments, and RCH commenced an eviction action. The eviction action was settled by 3-J agreeing to pay RCH $3000 in rent and to vacate the premises. 3-J complied with the settlement. Thereafter, RCH examined the premises and found damage caused by 3-J. RCH commenced an action to recover damages. After all pleadings were filed, 3-J filed a motion for leave to file a counterclaim prior to the trial, seeking damages for equipment left on the premises. After a hearing on 3-J's motion, the court denied leave to file a counterclaim and set the matter for trial. At the trial, RCH presented photographs, testimony and receipts regarding the damage and evidence of attorneys' fees. The court awarded RCH $603 in damages and $2025 in attorneys' fees.

3-J appealed, and the appellate court affirmed. It held that absent an abuse of discretion, it would not disturb the trial court's decision regarding the damages and attorneys' fees. The appellate court held that the trial court properly weighed the conflicting evidence and was in the best position to determine the credibility of the evidence. It concluded that based upon the evidence, nothing in the record indicated that the lower court's decision was improper. The appellate court further noted that although it would not make a “blanket analysis” that any minimal fee is proper, in this case, the amount of attorneys' fees in dispute was so minimal that it would be improper to remand the issue to engage in an analysis of the propriety of the fee because that would simply increase the amount of attorneys' fees generated. Finally, the appellate court held that it was within the trial court's discretion to deny 3-J's motion for leave to file a counterclaim. It held that it was established during the trial that 3-J was aware of its dispute over the equipment when the action commenced and when it filed its answer and that 3-J had sufficient opportunity prior to filing its leave to amend on the “eve of trial.”

GOVERNMENTAL TAKING

In a governmental taking where damages were assessed, the owner was entitled only to proceeds for its affected leasehold interest; the subtenant, who also had a fee estate, was entitled to the entire amount of the proceeds because it was the only party who suffered a financial loss as a result of the taking. Commissioner of the Department of Transportation v. Fleet National Bank, CV010074615S, Conn. Super. Ct., Jan. 9, 2004.

Connecticut National Bank (CNB), a predecessor in interest to Fleet, entered into a ground lease with Pacitti, a predecessor in interest to O.E. Limited Partnership (O.E.). The lease provided that CNB would rent the property to Pacitti for $1 per month for 45 years. On the same date, O.E. agreed to sublease the property back to CNB. O.E. agreed to demolish the existing building and create new construction to be used as a CNB branch. Thereafter, the Commissioner of Transportation filed a notice of condemnation and assessment of damages after a partial taking of property owned by Fleet. The damages were assessed at $35,300. After the damages were assessed, Fleet and O.E. claimed rights to the proceeds. O.E. argued it was entitled to the entire amount of the proceeds because the language of the sublease and ground lease unambiguously provided that if there was a governmental taking, Fleet, as tenant, would not be entitled to any portion of the proceeds. Fleet argued that under the ground lease, O.E. was entitled to the proceeds only to the extent that the condemnation affected O.E.'s leasehold interest. It argued that O.E.'s leasehold was not affected by the taking, and the only party that suffered economic damages due to the taking was Fleet.

The court awarded the entire amount of the proceeds to Fleet. It held that based upon the language of the ground lease, O.E. was entitled to a portion of the proceeds that affected its leasehold interest and Fleet was entitled to the portion that affected its fee estate. Because no evidence established that O.E. suffered a decrease in the rental value of the property as a result of the taking, only Fleet suffered a loss because it had less property in its fee estate.

PERSONAL INJURY

A landlord may be responsible for physical injury suffered by a tenant where the injury may have been caused by the landlord's negligence prior to the parties' signing a lease. O'Connell v. Historic Investments of the South, Inc., A03A1937, Ga. Ct. App., Jan. 23, 2004.

O'Connell leased the basement and first floor of a historic building. A few days after O'Connell signed the lease, he was injured when the ceiling collapsed. He commenced an action against Thomas Realty and Historic Investments, seeking to recover damages for his injuries. The trial court granted Thomas Realty's and Historic Investments' motions for summary judgment.

O'Connell appealed, and the appellate court reversed as to Historic Investments after a de novo review. The appellate court held that at the time O'Connell signed the lease, all of the parties were aware that the roof leaked all the way to the first floor. Furthermore, the lease provided that O'Connell would be responsible for the repair of the interior portions of the building. However, the court concluded that the lease did not absolve Historic Investments of any negligence it committed prior to the signing of the lease with O'Connell. Although the leaking roof was a “patent defect” of which O'Connell was aware at the time the lease was signed, the dangerous condition of the ceiling was not a patent defect and Historic Investments may have been negligent in the maintenance of the leased premises. The appellate court remanded the matter to trial for the finder of fact to determine whether Historic Investments was negligent.

CONFLICTING PROVISIONS

Where a written lease contains conflicting provisions that cannot be reconciled, the court may interpret the parties' actions to determine which provision shall take precedence. McDonald v. Squeglia, CV010452868S, Conn. Super. Ct., New Haven, Jan. 7, 2004.

The parties entered into a written lease on June 1, 2001. The lease was printed on a Blumberg form and Paragraph 20 provided that if the tenant remained at the premises after the lease expired, the holding over would not constitute a renewal or extension of the lease. The landlord would have the option to treat the tenant as one who was not removed at the end of the term, or the landlord could consider the holdover to be a month-to-month tenancy subject to the terms and conditions of the lease. However, Paragraph 34 provided that the tenant was required to notify the landlord in writing 3 months in advance if the tenant wished to cancel the lease; if no notice was given to the landlord, the lease would be automatically renewed for another year.

The court concluded that the two paragraphs were not only inconsistent but could not be reconciled and concluded that Paragraph 34 would take precedence based upon the evidence and the behavior of the parties. The credible evidence established that the landlord had sent various notices to the tenant requesting an increase in rent after the original term expired and the tenant continued to occupy the premises, indicating that the landlord had interpreted the lease under Paragraph 34. No credible evidence established that either party understood Paragraph 20 to be the prevailing paragraph, and the court awarded damages to the landlord.

ATTORNEYS' FEES

A landlord is entitled to collect attorneys' fees after a tenant defaults on rent where the written lease limits the liability of the landlord to its interest in the building. Storage Realty Corporation v. North American Environmental Services, Docket: Cum-03-283, Maine, Jan. 22, 2004.

Storage Realty and Environmental entered into a net lease for real property. The lease provided that Environmental would pay monthly rent and all property taxes. The lease further provided, inter alia, that Environmental would indemnify Storage Realty for any loss arising from its occupancy, including reasonable attorneys' fees, and pay the landlord to enforce any obligation resulting from the tenant's breach. Following litigation, a trial court awarded Storage Realty damages and attorneys' fees after Environmental defaulted on rent payments. Environmental appealed, disputing the attorneys' fees and arguing that under the lease, payment of attorneys' fees only applied to litigation regarding liability, not default. The appellate court affirmed the trial court's decision. It held that Storage Realty was entitled to attorneys' fees because the net lease limited the liability of the landlord to its interest in the building, and payment of attorneys' fees was in furtherance of the landlord's right to receive rent in the event of the tenant's default.

TRIAL COURT DISCRETION

Absent an abuse of discretion, an appellate court will not disturb a trial court's decision regarding damages and attorneys' fees; it is within the trial court's discretion to deny a motion for leave to file a counterclaim where the defendant was aware that the claim existed at the time of the commencement of the action and at the time its answer was filed. RCH Co. v. 3-J Machining Service, No. 82671, Ohio Ct. App., Jan. 8, 2004.

RCH leased premises to 3-J for 3-J to operate a machine shop. Thereafter, 3-J failed to make rent payments, and RCH commenced an eviction action. The eviction action was settled by 3-J agreeing to pay RCH $3000 in rent and to vacate the premises. 3-J complied with the settlement. Thereafter, RCH examined the premises and found damage caused by 3-J. RCH commenced an action to recover damages. After all pleadings were filed, 3-J filed a motion for leave to file a counterclaim prior to the trial, seeking damages for equipment left on the premises. After a hearing on 3-J's motion, the court denied leave to file a counterclaim and set the matter for trial. At the trial, RCH presented photographs, testimony and receipts regarding the damage and evidence of attorneys' fees. The court awarded RCH $603 in damages and $2025 in attorneys' fees.

3-J appealed, and the appellate court affirmed. It held that absent an abuse of discretion, it would not disturb the trial court's decision regarding the damages and attorneys' fees. The appellate court held that the trial court properly weighed the conflicting evidence and was in the best position to determine the credibility of the evidence. It concluded that based upon the evidence, nothing in the record indicated that the lower court's decision was improper. The appellate court further noted that although it would not make a “blanket analysis” that any minimal fee is proper, in this case, the amount of attorneys' fees in dispute was so minimal that it would be improper to remand the issue to engage in an analysis of the propriety of the fee because that would simply increase the amount of attorneys' fees generated. Finally, the appellate court held that it was within the trial court's discretion to deny 3-J's motion for leave to file a counterclaim. It held that it was established during the trial that 3-J was aware of its dispute over the equipment when the action commenced and when it filed its answer and that 3-J had sufficient opportunity prior to filing its leave to amend on the “eve of trial.”

GOVERNMENTAL TAKING

In a governmental taking where damages were assessed, the owner was entitled only to proceeds for its affected leasehold interest; the subtenant, who also had a fee estate, was entitled to the entire amount of the proceeds because it was the only party who suffered a financial loss as a result of the taking. Commissioner of the Department of Transportation v. Fleet National Bank, CV010074615S, Conn. Super. Ct., Jan. 9, 2004.

Connecticut National Bank (CNB), a predecessor in interest to Fleet, entered into a ground lease with Pacitti, a predecessor in interest to O.E. Limited Partnership (O.E.). The lease provided that CNB would rent the property to Pacitti for $1 per month for 45 years. On the same date, O.E. agreed to sublease the property back to CNB. O.E. agreed to demolish the existing building and create new construction to be used as a CNB branch. Thereafter, the Commissioner of Transportation filed a notice of condemnation and assessment of damages after a partial taking of property owned by Fleet. The damages were assessed at $35,300. After the damages were assessed, Fleet and O.E. claimed rights to the proceeds. O.E. argued it was entitled to the entire amount of the proceeds because the language of the sublease and ground lease unambiguously provided that if there was a governmental taking, Fleet, as tenant, would not be entitled to any portion of the proceeds. Fleet argued that under the ground lease, O.E. was entitled to the proceeds only to the extent that the condemnation affected O.E.'s leasehold interest. It argued that O.E.'s leasehold was not affected by the taking, and the only party that suffered economic damages due to the taking was Fleet.

The court awarded the entire amount of the proceeds to Fleet. It held that based upon the language of the ground lease, O.E. was entitled to a portion of the proceeds that affected its leasehold interest and Fleet was entitled to the portion that affected its fee estate. Because no evidence established that O.E. suffered a decrease in the rental value of the property as a result of the taking, only Fleet suffered a loss because it had less property in its fee estate.

PERSONAL INJURY

A landlord may be responsible for physical injury suffered by a tenant where the injury may have been caused by the landlord's negligence prior to the parties' signing a lease. O'Connell v. Historic Investments of the South, Inc., A03A1937, Ga. Ct. App., Jan. 23, 2004.

O'Connell leased the basement and first floor of a historic building. A few days after O'Connell signed the lease, he was injured when the ceiling collapsed. He commenced an action against Thomas Realty and Historic Investments, seeking to recover damages for his injuries. The trial court granted Thomas Realty's and Historic Investments' motions for summary judgment.

O'Connell appealed, and the appellate court reversed as to Historic Investments after a de novo review. The appellate court held that at the time O'Connell signed the lease, all of the parties were aware that the roof leaked all the way to the first floor. Furthermore, the lease provided that O'Connell would be responsible for the repair of the interior portions of the building. However, the court concluded that the lease did not absolve Historic Investments of any negligence it committed prior to the signing of the lease with O'Connell. Although the leaking roof was a “patent defect” of which O'Connell was aware at the time the lease was signed, the dangerous condition of the ceiling was not a patent defect and Historic Investments may have been negligent in the maintenance of the leased premises. The appellate court remanded the matter to trial for the finder of fact to determine whether Historic Investments was negligent.

CONFLICTING PROVISIONS

Where a written lease contains conflicting provisions that cannot be reconciled, the court may interpret the parties' actions to determine which provision shall take precedence. McDonald v. Squeglia, CV010452868S, Conn. Super. Ct., New Haven, Jan. 7, 2004.

The parties entered into a written lease on June 1, 2001. The lease was printed on a Blumberg form and Paragraph 20 provided that if the tenant remained at the premises after the lease expired, the holding over would not constitute a renewal or extension of the lease. The landlord would have the option to treat the tenant as one who was not removed at the end of the term, or the landlord could consider the holdover to be a month-to-month tenancy subject to the terms and conditions of the lease. However, Paragraph 34 provided that the tenant was required to notify the landlord in writing 3 months in advance if the tenant wished to cancel the lease; if no notice was given to the landlord, the lease would be automatically renewed for another year.

The court concluded that the two paragraphs were not only inconsistent but could not be reconciled and concluded that Paragraph 34 would take precedence based upon the evidence and the behavior of the parties. The credible evidence established that the landlord had sent various notices to the tenant requesting an increase in rent after the original term expired and the tenant continued to occupy the premises, indicating that the landlord had interpreted the lease under Paragraph 34. No credible evidence established that either party understood Paragraph 20 to be the prevailing paragraph, and the court awarded damages to the landlord.

ATTORNEYS' FEES

A landlord is entitled to collect attorneys' fees after a tenant defaults on rent where the written lease limits the liability of the landlord to its interest in the building. Storage Realty Corporation v. North American Environmental Services, Docket: Cum-03-283, Maine, Jan. 22, 2004.

Storage Realty and Environmental entered into a net lease for real property. The lease provided that Environmental would pay monthly rent and all property taxes. The lease further provided, inter alia, that Environmental would indemnify Storage Realty for any loss arising from its occupancy, including reasonable attorneys' fees, and pay the landlord to enforce any obligation resulting from the tenant's breach. Following litigation, a trial court awarded Storage Realty damages and attorneys' fees after Environmental defaulted on rent payments. Environmental appealed, disputing the attorneys' fees and arguing that under the lease, payment of attorneys' fees only applied to litigation regarding liability, not default. The appellate court affirmed the trial court's decision. It held that Storage Realty was entitled to attorneys' fees because the net lease limited the liability of the landlord to its interest in the building, and payment of attorneys' fees was in furtherance of the landlord's right to receive rent in the event of the tenant's default.