Berg v. Wiley,
264 N.W.2d 145 (Minn. 1978).
Leonard, Street and Deinard and Lowell J. Noteboom and David C. Zalk, Minneapolis, for appellants.
Mannikko & Swenson, Joseph L. Mannikko, Robert P. Larson, Wayzata, Robert G. Share, Minneapolis, for respondents.
Heard before Rogosheske, Peterson, and Wahl, JJ., and considered and decided by the court en banc.
Defendant landlord, Wiley Enterprises, Inc., and defendant Rodney A. Wiley (hereafter collectively referred to as Wiley) appeal from a judgment upon a jury verdict awarding plaintiff tenant, A Family Affair Restaurant, Inc., damages for wrongful eviction from its leased premises. The issues for review are whether the evidence was sufficient to support the jury’s finding that the tenant did not abandon or surrender the premises and whether the trial court erred in finding Wiley’s reentry forcible and wrongful as a matter of law. We hold that the jury’s verdict is supported by sufficient evidence and that the trial court’s determination of unlawful entry was correct as a matter of law, and affirm the judgment.
On November 11, 1970, Wiley, as lessor and tenant’s predecessor in interest as lessee, executed a written lease agreement letting land and a building in Osseo, Minnesota, for use as a restaurant. The lease provided a 5-year term beginning December 1, 1970, and specified that the tenant agreed to bear all costs of repairs and remodeling, to “make no changes in the building structure” without prior written authorization from Wiley, and to “operate the restaurant in a lawful and prudent manner.”Wiley also reserved the right “at (his) option (to) retake possession” of the premises “(s)hould the Lessee fail to meet the conditions of this Lease.”1 In early 1971, plaintiff Kathleen Berg took assignment of the lease from the prior lessee, and on May 1, 1971, she opened “A Family Affair Restaurant” on the premises. In January 1973, Berg incorporated the restaurant and assigned her interest in the lease to “A Family Affair Restaurant, Inc.” As sole shareholder of the corporation, she alone continued to act for the tenant.
The present dispute has arisen out of Wiley’s objection to Berg’s continued remodeling of the restaurant without procuring written permission and her consequent operation of the restaurant in a state of disrepair with alleged health code violations. Strained relations between the parties came to a head in June and July 1973. In a letter dated June 29, 1973, Wiley’s attorney charged Berg with having breached lease items 5 and 6 by making changes in the building structure without written authorization and by operating an unclean kitchen in violation of health regulations. The letter demanded that a list of eight remodeling items be completed within 2 weeks from the date of the letter, by Friday, July 13, 1973, or Wiley would retake possession of the premises under lease item 7. Also, a June 13 inspection of the restaurant by the Minnesota Department of Health had produced an order that certain listed changes be completed within specified time limits in order to comply with the health code. The major items on the inspector’s list, similar to those listed by Wiley’s attorney, were to be completed by July 15, 1973.
During the 2-week deadline set by both Wiley and the health department, Berg continued to operate the restaurant without closing to complete the required items of remodeling. The evidence is in dispute as to whether she intended to permanently close the restaurant and vacate the premises at the end of the 2 weeks or simply close for about 1 month in order to remodel to comply with the health code. At the close of business on Friday, July 13, 1973, the last day of the 2-week period, Berg dismissed her employees, closed the restaurant, and placed a sign in the window saying “Closed for Remodeling.” Earlier that day, Berg testified, Wiley came to the premises in her absence and attempted to change the locks. When she returned and asserted her right to continue in possession, he complied with her request to leave the locks unchanged. Berg also testified that at about 9:30 p. m. that evening, while she and four of her friends were in the restaurant, she observed Wiley hanging from the awning peering into the window. Shortly thereafter, she heard Wiley pounding on the back door demanding admittance. Berg called the county sheriff to come and preserve order. Wiley testified that he observed Berg and a group of her friends in the restaurant removing paneling from a wall. Allegedly fearing destruction of his property, Wiley called the city police, who, with the sheriff, mediated an agreement between the parties to preserve the status quo until each could consult with legal counsel on Monday, July 16, 1973.
Wiley testified that his then attorney advised him to take possession of the premises and lock the tenant out. Accompanied by a police officer and a locksmith, Wiley entered the premises in Berg’s absence and without her knowledge on Monday, July 16, 1973, and changed the locks. Later in the day, Berg found herself locked out. The lease term was not due to expire until December 1, 1975. The premises were re-let to another tenant on or about August 1, 1973. Berg brought this damage action against Wiley and three other named defendants, including the new tenant, on July 27, 1973.2 A second amended complaint sought damages for lost profits, damage to chattels, intentional infliction of emotional distress, and other tort damages based upon claims in wrongful eviction, contract, and tort. Wiley answered with an affirmative defense of abandonment and surrender and counterclaimed for damage to the premises and indemnification on mechanics lien liability incurred because of Berg’s remodeling. At the close of Berg’s case, all defendants other than Rodney A. Wiley and Wiley Enterprises, Inc., were dismissed from the action. Only Berg’s action for wrongful eviction and intentional infliction of emotional distress and Wiley’s affirmative defense of abandonment and his counterclaim for damage to the premises were submitted by special verdict to the jury. With respect to the wrongful eviction claim, the trial court found as a matter of law that Wiley did in fact lock the tenant out, and that the lockout was wrongful.
The jury, by answers to the questions submitted, found no liability on Berg’s claim for intentional infliction of emotional distress and no liability on Wiley’s counterclaim for damages to the premises, but awarded Berg $31,000 for lost profits and $3,540 for loss of chattels resulting from the wrongful lockout. The jury also specifically found that Berg neither abandoned nor surrendered the premises. The trial court granted Wiley’s post-trial motion for an order decreeing that Berg indemnify Wiley for any mechanics lien liability incurred due to Berg’s remodeling by way of set-off from Berg’s judgment and ordered the judgment accordingly amended.
On this appeal, Wiley seeks an outright reversal of the damages award for wrongful eviction, claiming insufficient evidence to support the jury’s finding of no abandonment or surrender and claiming error in the trial court’s finding of wrongful eviction as a matter of law.
The first issue before us concerns the sufficiency of evidence to support the jury’s finding that Berg had not abandoned or surrendered the leasehold before being locked out by Wiley. Viewing the evidence to support the jury’s special verdict in the light most favorable to Berg, as we must,3 we hold it amply supports the jury’s finding of no abandonment or surrender of the premises. While the evidence bearing upon Berg’s intent was strongly contradictory, the jury could reasonably have concluded, based on Berg’s testimony and supporting circumstantial evidence, that she intended to retain possession, closing temporarily to remodel. Thus, the lockout cannot be excused on ground that Berg abandoned or surrendered the leasehold.
The second and more difficult issue is whether Wiley’s self-help repossession of the premises by locking out Berg was correctly held wrongful as a matter of law.
Minnesota has historically followed the common-law rule that a landlord may rightfully use self-help to retake leased premises from a tenant in possession without incurring liability for wrongful eviction provided two conditions are met: (1) The landlord is legally entitled to possession, such as where a tenant holds over after the lease term or where a tenant breaches a lease containing a reentry clause; and (2) the landlord’s means of reentry are peaceable. Mercil v. Broulette, 66 Minn. 416, 69 N.W. 218 (1896). Under the common-law rule, a tenant who is evicted by his landlord may recover damages for wrongful eviction where the landlord either had no right to possession or where the means used to remove the tenant were forcible, or both. See, e. g., Poppen v. Wadleigh, 235 Minn. 400, 51 N.W.2d 75 (1952); Sweeney v. Meyers, 199 Minn. 21, 270 N.W. 906 (1937); Lobdell v. Keene, 85 Minn. 90, 88 N.W. 426 (1901). See, also, Minn.St. 566.01 (statutory cause of action where entry is not “allowed by law” or, if allowed, is not made “in a peaceable manner”).
Wiley contends that Berg had breached the provisions of the lease, thereby entitling Wiley, under the terms of the lease, to retake possession, and that his repossession by changing the locks in Berg’s absence was accomplished in a peaceful manner. In a memorandum accompanying the post-trial order, the trial court stated two grounds for finding the lockout wrongful as a matter of law: (1) It was not accomplished in a peaceable manner and therefore could not be justified under the common-law rule, and (2) any self-help reentry against a tenant in possession is wrongful under the growing modern doctrine that a landlord must always resort to the judicial process to enforce his statutory remedy against a tenant wrongfully in possession. Whether Berg had in fact breached the lease and whether Wiley was hence entitled to possession was not judicially determined. That issue became irrelevant upon the trial court’s finding that Wiley’s reentry was forcible as a matter of law because even if Berg had breached the lease, this could not excuse Wiley’s nonpeaceable reentry. The finding that Wiley’s reentry was forcible as a matter of law provided a sufficient ground for damages, and the issue of breach was not submitted to the jury.4
In each of our previous cases upholding an award of damages for wrongful eviction, the landlord had in fact been found to have no legal right to possession. In applying the common-law rule, we have not before had occasion to decide what means of self-help used to dispossess a tenant in his absence will constitute a nonpeaceable entry, giving a right to damages without regard to who holds the legal right to possession. Wiley argues that only actual or threatened violence used against a tenant should give rise to damages where the landlord had the right to possession. We cannot agree.
It has long been the policy of our law to discourage landlords from taking the law into their own hands, and our decisions and statutory law have looked with disfavor upon any use of self-help to dispossess a tenant in circumstances which are likely to result in breaches of the peace. We gave early recognition to this policy in Lobdell v. Keene, 85 Minn. 90, 101, 88 N.W. 426, 430 (1901), where we said:
The object and purpose of the legislature in the enactment of the forcible entry and unlawful detainer statute was to prevent those claiming a right of entry or possession of lands from redressing their own wrongs by entering into possession in a violent and forcible manner. All such acts tend to a breach of the peace, and encourage high-handed oppression. The law does not permit the owner of land, be his title ever so good, to be the judge of his own rights with respect to a possession adversely held, but puts him to his remedy under the statutes.
To facilitate a resort to judicial process, the legislature has provided a summary procedure in Minn.St. 566.02 to 566.17 whereby a landlord may recover possession of leased premises upon proper notice and showing in court in as little as 3 to 10 days. As we recognized in Mutual Trust Life Ins. Co. v. Berg, 187 Minn. 503, 505, 246 N.W. 9, 10 (1932), “(t)he forcible entry and unlawful detainer statutes were intended to prevent parties from taking the law into their own hands when going into possession of lands and tenements….” To further discourage self-help, our legislature has provided treble damages for forcible evictions, ss 557.08 and 557.09, and has provided additional criminal penalties for intentional and unlawful exclusion of a tenant.s 504.25. In Sweeney v. Meyers, supra, we allowed a business tenant not only damages for lost profits but also punitive damages against a landlord who, like Wiley, entered in the tenant’s absence and locked the tenant out.
In the present case, as in Sweeney, the tenant was in possession, claiming a right to continue in possession adverse to the landlord’s claim of breach of the lease, and had neither abandoned nor surrendered the premises. Wiley, well aware that Berg was asserting her right to possession, retook possession in her absence by picking the locks and locking her out. The record shows a history of vigorous dispute and keen animosity between the parties. Upon this record, we can only conclude that the singular reason why actual violence did not erupt at the moment of Wiley’s changing of the locks was Berg’s absence and her subsequent self-restraint and resort to judicial process. Upon these facts, we cannot find Wiley’s means of reentry peaceable under the common-law rule. Our long-standing policy to discourage self-help which tends to cause a breach of the peace compels us to disapprove the means used to dispossess Berg. To approve this lockout, as urged by Wiley, merely because in Berg’s absence no actual violence erupted while the locks were being changed, would be to encourage all future tenants, in order to protect their possession, to be vigilant and thereby set the stage for the very kind of public disturbance which it must be our policy to discourage.
Consistent with our conclusion that we cannot find Wiley’s means of reentry peaceable under the common-law rule is Gulf Oil Corp. v. Smithey, 426 S.W.2d 262 (Tex.Civ.App.1968). In that case the Texas court, without departing from the common-law rule, held that a landlord’s reentry in the tenant’s absence by picking the locks and locking the tenant out, although accomplished without actual violence, was forcible as a matter of law.5 The Texas courts, by continuing to embrace the common-law rule, have apparently left open the possibility that self-help may be available in that state to dispossess a tenant in some undefined circumstances which may be found peaceable.
We recognize that the growing modern trend departs completely from the common-law rule to hold that self-help is never available to dispossess a tenant who is in possession and has not abandoned or voluntarily surrendered the premises. Annotation, 6 A.L.R.3d 177, 186; 76 Dickinson L.Rev. 215, 227. This growing rule is founded on the recognition that the potential for violent breach of peace inheres in any situation where a landlord attempts by his own means to remove a tenant who is claiming possession adversely to the landlord. Courts adopting the rule reason that there is no cause to sanction such potentially disruptive self-help where adequate and speedy means are provided for removing a tenant peacefully through judicial process. At least 16 states6 have adopted this modern rule, holding that judicial proceedings, including the summary procedures provided in those states’ unlawful detainer statutes, are the exclusive remedy by which a landlord may remove a tenant claiming possession. See, e. g., Kassan v. Stout, 9 Cal.3d 39, 106 Cal.Rptr. 783, 507 P.2d 87 (1973); Jordan v. Talbot, 55 Cal.2d 597, 12 Cal.Rptr. 488, 361 P.2d 20 (1961); Malcolm v. Little, 295 A.2d 711 (Del.1972); Teston v. Teston, 135 Ga.App. 321, 217 S.E.2d 498 (1975); Weber v. McMillan, 285 So.2d 349 (La.App.1973); Bass v. Boetel & Co., 191 Neb. 733, 217 N.W.2d 804 (1974); Edwards v. C. N. Investment Co., 27 Ohio Misc. 57, 56 Ohio O.2d 261, 272 N.E.2d 652 (1971).7
While we would be compelled to disapprove the lockout of Berg in her absence under the common-law rule as stated, we approve the trial court’s reasoning and adopt as preferable the modern view represented by the cited cases. To make clear our departure from the common-law rule for the benefit of future landlords and tenants, we hold that, subsequent to our decision in this case, the only lawful means to dispossess a tenant who has not abandoned nor voluntarily surrendered but who claims possession adversely to a landlord’s claim of breach of a written lease is by resort to judicial process. We find that Minn.St. 566.02 to 566.17 provide the landlord with an adequate remedy for regaining possession in every such8 Where speedier action than provided in ss 566.02 to 566.17 seems necessary because of threatened destruction of the property or other exigent circumstances, a temporary restraining order under Rule 65, Rules of Civil Procedure, and law enforcement protection are available to the landlord. Considered together, these statutory and judicial remedies provide a complete answer to the landlord. In our modern society, with the availability of prompt and sufficient legal remedies as described, there is no place and no need for self-help against a tenant in claimed lawful possession of leased premises.
Applying our holding to the facts of this case, we conclude, as did the trial court, that because Wiley failed to resort to judicial remedies against Berg’s holding possession adversely to Wiley’s claim of breach of the lease, his lockout of Berg was wrongful as a matter of law. The rule we adopt in this decision is fairly applied against Wiley, for it is clear that, applying the older common-law rule to the facts and circumstances peculiar to this case, we would be compelled to find the lockout nonpeaceable for the reasons previously stated. The jury found that the lockout caused Berg damage and, as between Berg and Wiley, equity dictates that Wiley, who himself performed the act causing the damage, must bear the loss.
- The provisions of the lease pertinent to this case provide: “Item # 5 The Lessee will make no changes to the building structure without first receiving written authorization from the Lessor. The Lessor will promptly reply in writing to each request and will cooperate with the Lessee on any reasonable request.”Item # 6 The Lessee agrees to operate the restaurant in a lawful and prudent manner during the lease period. “Item # 7 Should the Lessee fail to meet the conditions of this Lease the Lessor may at their option retake possession of said premises. In any such event such act will not relieve Lessee from liability for payment the rental herein provided or from the conditions or obligations of this lease.”
- Proceedings in this damage action were suspended for the duration of a separate unlawful detainer action in which Berg sought to recover possession of the premises under Minn.St. c. 566. In that action, this court reversed a judgment awarding possession of the premises to Berg, holding that an unlawful detainer action under Minn.St. c. 566 was not available to a tenant against his landlord. Berg v. Wiley, 303 Minn. 247, 226 N.W.2d 904 (1975). An amended complaint in this damage action was served on May 6, 1974. A second amended complaint was served on December 12, 1975, and proceedings were resumed.
- Kuehl v. National Tea Co., Minn., 245 N.W.2d 235 (1976).
- Although not affirmatively pleaded by Wiley, the issue of whether Berg had breached the lease and Wiley’s waiver thereof was litigated by consent with evidence presented by both parties, and Wiley on post-trial motion alleged as error the trial court’s failure to submit the issue to the jury. We observe that upon the conflicting testimony in the record before us we would be unable to find as a matter of law that Berg breached the lease and that Wiley did not waive any claimed breach. Thus, even assuming that Wiley’s reentry could be found peaceable, we would be unable to resolve this dispute in Wiley’s favor under the common-law rule, as he urges, without a remand to determine the issue of breach, which the parties do not desire.
- California courts similarly implied force in certain nonviolent entries made in the tenant’s absence. See, e. g., Karp v. Margolis, 159 Cal.App.2d 69, 323 P.2d 557 (1958); McNeil v. Higgins, 86 Cal.App.2d 723, 195 P.2d 470 (1948).
- Annotation, 6 A.L.R.3d 177, 186, Supp. 13, shows this modern rule to have been adopted in California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Louisiana, Nebraska, North Carolina, Ohio, Tennessee, Texas, Utah, Vermont, and Washington.
- We have examined the summary statutory procedures for repossession held exclusive in these other states and we find them comparable and on the whole no speedier than the summary judicial procedures by which a landlord may regain possession in as little as 3 to 10 days under Minn.St. 566.02 to 566.17.
- Under ss 566.05 and 566.06, a landlord may regain possession in default proceedings against a tenant personally served with process in as little as 3 to 10 days. Default judgment against a tenant not present and served by posting may be procured in a week to 10 days. ss 566.05 and 566.06. Trial is by the court unless either party demands a jury trial. s 566.07. Proceedings are stayed on appeal except as against a holdover tenant. s 566.12. Upon execution of a writ of restitution, the tenant is allowed 24 hours to vacate the property. We are mindful that by s 566.04 the summary remedy of ss 566.02 to 566.17 is made unavailable against any tenant having been “in quiet possession for three years next before the filing of the complaint….” This reflects an appropriate policy choice by the legislature to require full litigation of the right to possession in a common-law ejectment action before judicially ousting a tenant of such long tenure. Our holding, disallowing self-help in such cases as well, is consistent with the legislative policy protecting the long-term tenant. The availability of temporary restraining orders, temporary injunctions against waste, and eventual damages for unlawful detainer or unpaid rent provides an adequate compensating remedy to the landlord for any delay in obtaining possession during judicial proceedings.
Rucker v. Wynn,
212 Ga. App. 69 (Ga. Ct. App. 1994)
Alan I. Begner, Penny M. Douglass, for appellants.
Alston & Bird, A. McCampbell Gibson, T. Michael Tennant, for appellee.
After the tenants in a commercial lease agreement failed to pay rent when due under the lease terms, the landlord, without notice to the tenants, retook possession of the premises and rerented it pursuant to terms in the lease providing that the lease would remain in effect, and that the tenants would be liable for accruing rent less amounts collected on rerental. The tenants sued the landlord for wrongful eviction, trespass, breach of the implied covenant of quiet enjoyment of the premises, breach of the lease agreement, breach of an alleged oral contract to accept late payment of rent, and conversion of personal property. The landlord counterclaimed seeking the difference between past due rent accruing under the lease and rent generated by rerental. The trial court granted partial summary judgment in favor of the landlord eliminating all the tenants’ claims except conversion of personal property, and granting summary judgment in favor of the landlord on the counterclaim for $248,830 for accrued rent, plus additional sums for attorney fees and interest. The tenants appeal from the order of summary judgment.
The lease agreement at issue provided for the lease of the premises for a restaurant business for a term of five years beginning July 1, 1990 for monthly rent of $7,000 for the first five months and $12,500 per month thereafter. Rent was due under the lease on the first day of each month. The tenants failed to pay the $12,500 rent payment due on January 1, 1991. On or about January 7, 1991, the tenants gave the landlord a check for $12,500, but informed the landlord that there were not sufficient funds in the bank to cover the check. According to the landlord, the tenants asked him to hold the check and allow them to operate the business through the next weekend so they could generate funds to cover the check, which the landlord agreed to do. According to the tenants, the landlord agreed to hold the check for two weekends. The landlord deposited the check on January 16, 1991, and it was refused for insufficient funds.
The lease defined a failure to pay rent as a default constituting a breach of the lease, and further provided that in the event of such default, and without notice, the “Landlord, as Tenant’s agent, without terminating this lease may enter upon and rent the premises, in whole or in part, at the best price obtainable by reasonable effort, without advertisement and by private negotiations and for any term landlord deems proper, with Tenant being liable to Landlord for the deficiency, if any, between Tenant’s rent hereunder and the price obtained by Landlord on reletting; provided, however, that Landlord shall not be considered to be under any duty by reason of this provision to take any action to mitigate damages by reason of Tenant’s default.” Pursuant to this lease provision, the landlord reentered the premises without notice on January 18, 1991 after business hours when the tenants were not present, evicted the tenants by changing the locks on the doors, and prepared and rerented the premises.
1. There is no merit to the tenants’ claim that the landlord wrongfully evicted them without notice or resort to dispossessory proceedings. “[A] landlord may contract to avoid [the statutory notice and other requirements of dispossessory proceedings set forth in OCGA § 44-7-50 et seq.] when renting property which is not to be used as a dwelling-place.” (Emphasis in original.) Colonial Self Storage &c. v. Concord Properties, 147 Ga. App. 493, 495 (249 SE2d 310) (1978). The landlord was entitled to rely upon the default provisions in the commercial lease agreement, which gave him the right to reenter and take possession without notice or resort to legal proceedings, and he acted pursuant to the terms of the lease in reentering and taking possession of the premises for rerental upon default by the tenants for nonpayment of rent. Id.; Wilkerson v. Chattahoochee Parks, 244 Ga. 472, 473-474 (260 SE2d 867) (1979); Eason Publications v. Monson, 163 Ga. App. 370, 371 (294 SE2d 585) (1982). Accordingly, we also conclude that the trial court properly granted summary judgment in favor of the landlord on the tenants’ claims for trespass, breach of the implied covenant of quiet enjoyment of the premises, and breach of the terms of the lease agreement. Compare Entelman v. Hagood, 95 Ga. 390 (22 SE 545) (1894); Real Estate Loan Co. v. Pugh, 47 Ga. App. 443 (170 SE 698) (1933); Teston v. Teston, 135 Ga. App. 321 (217 SE2d 498) (1975); and Forrest v. Peacock, 185 Ga. App. 189 (363 SE2d 581) (1987), rev’d on other grounds 258 Ga. 158 (368 SE2d 519) (1988) (cases dealing with actions for trespass for wrongful eviction of residential tenants); compare Albert Properties v. Watkins, 143 Ga. App. 184 (237 SE2d 670) (1977) (action for breach of residential tenant’s right to quiet enjoyment of the premises); compare Swift Loan &c. Co. v. Duncan, 195 Ga. App. 556 (394 SE2d 356) (1990) (action for trespass for self-help eviction of a commercial tenant, where there was also evidence that the landlord’s actions were in violation of the terms of the commercial lease agreement).
2. There was no error in the trial court’s grant of summary judgment in favor of the landlord on the claim that the landlord breached an oral agreement to accept late payment of the rent. There was no consideration to support such an agreement (see Clark v. GMAC, 185 Ga. App. 130, 136 (363 SE2d 813) (1987); Phillips v. Atlantic Bank &c. Co., 168 Ga. App. 590, 591 (309 SE2d 813) (1983)), and any oral agreement was voided by the express provision of the lease stating that, “[t]his Lease contains the entire agreement of the parties hereto and no representations, inducements, promises or agreements, oral or otherwise, between the parties, not embodied herein, shall be of any force or effect.” Clark, supra at 134; Great American Builders v. Howard, 207 Ga. App. 236, 240 (427 SE2d 588) (1993). The tenants’ additional claim on appeal that the landlord waived the right to timely payment of rent by previous acceptance of late payments was not raised in the trial court and presents nothing for appellate review. Lamb v. Georgia-Pacific Corp., 194 Ga. App. 848, 850 (392 SE2d 307) (1990).
3. Contrary to the tenants’ contentions, where under the terms of a commercial lease a landlord has the right to reenter and take possession of the premises without recourse to legal proceedings, he may do so and effect a self-help eviction if this can be accomplished without a breach of the peace. See generally Moss v. Chappell, 126 Ga. 196, 208 (54 SE 968) (1906); Peacock & Hunt Naval Stores Co. v. Brooks Lumber Co., 96 Ga. 542, 545-546 (23 SE 835) (1895). There is no evidence in this case that the landlord’s actions caused a breach of the peace. See Hopkins v. First Union Bank of Savannah, 193 Ga. App. 109, 110-111 (387 SE2d 144) (1989); Hill v. Fed. Employees Credit Union, 193 Ga. App. 44, 47-48 (386 SE2d 874) (1989); Deavers v. Standridge, 144 Ga. App. 673, 674-675 (242 SE2d 331) (1978).
4. Tenants claim the trial court erred in granting summary judgment for the landlord for rent accruing after they were evicted. Although “[g]enerally, when a landlord evicts a tenant and takes possession of the premises, the lease is terminated and the right to claim rent which accrues after eviction is extinguished,” the lease may provide otherwise. Peterson v. P. C. Towers, L.P., 206 Ga. App. 591 (426 SE2d 243) (1992). “[T]he parties to a lease agreement may contract in advance to hold the lessee liable for rent even after an eviction, deducting therefrom only the amounts recovered by the lessor from reletting the premises if such an agreement is premised on the existence of an explicit and detailed provision in the lease which clearly and unequivocally expressed the parties’ intention to hold the lessee responsible for after-accrued rent even should an eviction take place.” (Citations and punctuation omitted.) Id. at 591-592; Hardin v. Macon Mall, 169 Ga. App. 793 (315 SE2d 4) (1984).
The language used in the present lease was a clear expression of the parties’ intention that after reentry by the landlord to take possession of the premises for rerental, the tenants remained liable for accruing rent and were responsible to the landlord for the difference between the tenants’ rent accruing under the lease and the rent obtained by reletting. There is no merit to the tenants’ contention that the lease provisions were ambiguous. As the record stands, it is undisputed that the tenants’ rent accruing under the lease after eviction was $287,500, and that the landlord’s efforts to relet the premises generated rentals of $38,670, leaving a deficiency of $248,830.1 There was no error in the trial court’s grant of summary judgment in favor of the landlord on his counterclaim.
- The issue was not raised, and we do not address the contractual responsibility to mitigate damages which may be imposed on a landlord who reenters the premises pursuant to a lease provision as the tenant’s agent for the purpose of reletting the premises.
3.2. Tenant Duties
Rios v. Carrillo,
861 N.Y.S.2d 129 (N.Y. App. Div. 2008)
Peter Piddoubny, Astoria, for appellant.
Goldberg, Scudieri, Lindenberg & Block, P.C., New York City (Robert H. Goldberg of counsel), for respondent.
At issue on this appeal is the question of whether the Supreme Court properly applied the doctrine of mitigation of damages in the context of a default on a residential lease. We reiterate the principle that, in the absence of legislative direction to the contrary, common-law principles control and contrary to lower court authority, an assessment of damages should not require the prevailing party to mitigate damages.
In 2000 the plaintiff landlord leased a residential apartment to the defendant tenant for a term of two years. Around October 2001 the defendant vacated the apartment and ceased paying rent, which he contends was upon the plaintiff’s consent. In 2003 the plaintiff commenced this action to recover damages consisting of the unpaid rent she claims was due under the terms of the parties’ lease. After a nonjury trial before a Judicial Hearing Officer upon the parties’ stipulation, the Supreme Court dismissed the complaint, determining that the plaintiff failed to prove that she made a serious attempt to mitigate damages. The plaintiff appeals from the judgment, and we reverse.
The Supreme Court improperly determined that the plaintiff owed the defendant a duty to mitigate damages upon the breach of the parties’ residential lease. The Supreme Court relied on a line of cases stemming from the decision of the Appellate Term, Second and Eleventh Judicial Districts, in Paragon Indus. v Williams (122 Misc 2d 628, 629 ), which, relying on federal case law, stated as follows:
“However, following the landmark case of Javins v First Nat. Realty Corp. (428 F2d 1071, cert den 400 U.S. 925) … [c]ourts in this State began to acknowledge that a lease of residential premises establishes a contractual relationship with mutual obligations and that there are rules of law applicable to other agreements that should apply to leases… Not long thereafter, some courts extended this reasoning to the issue of landlord’s [sic] duty to mitigate, concluding that a landlord should indeed have such a duty … We now hold that a landlord has such a duty” (citations omitted).
Even within the Appellate Term this view has not been uniformly applied (see Callender v Titus, 4 Misc 3d 126[A], 2004 NY Slip Op 50608[U]  [landlord had no duty to mitigate damages by reletting premises]). Other courts in this Department have likewise opted to not impose such a duty on a prevailing landlord (see Duda v Thompson, 169 Misc 2d 649 ).
The Supreme Court’s reliance on Paragon Indus. v Williams (122 Misc 2d 628 ) and its progeny is misplaced. Well-settled law in this state imposes no duty on a residential landlord to mitigate damages (see Holy Props. v Cole Prods., 87 NY2d 130 ; Whitehouse Estates v Post, 173 Misc 2d 558 ). As noted by the Court of Appeals in Holy Props. v Cole Prods. (87 NY2d at 133):
“The law imposes upon a party subjected to injury from breach of contract, the duty of making reasonable exertions to minimize the injury … Leases are not subject to this general rule, however, for, unlike executory contracts, leases have been historically recognized as a present transfer of an estate in real property … Once the lease is executed, the lessee’s obligation to pay rent is fixed according to its terms and a landlord is under no obligation or duty to the tenant to relet, or attempt to relet abandoned premises in order to minimize damages.”
Although Holy Props. involved a commercial lease, the broad language employed and the reliance on real property principles negate the possibility that the Court of Appeals was confining its determination only to commercial leases. There is simply no basis for limiting the broad language of Holy Props. Moreover, in Holy Props., the Court of Appeals placed great weight on the fact that the parties’ lease “expressly provided that plaintiff was under no duty to mitigate damages and that upon defendant’s abandonment of the premises or eviction, it would remain liable for all monetary obligations arising under the lease” and therefore concluded that “[if] the lease provides that the tenant shall be liable for rent after eviction, the provision is enforceable” (87 NY2d at 134).
Similarly, in the matter now before us, the lease between the parties provided that the defendant remains liable for the rent upon the cancellation of the lease except as provided by law. Thus, the parties agreed at the onset of the tenancy that the defendant would remain liable for rent due under the lease for its duration.
Since the Court of Appeals has not modified its rule in Holy Props., nor has there been any legislative enactment which requires a contrary result, we are constrained to follow what we perceive to be established precedent that a residential landlord is under no duty to mitigate damages where the terms of the lease do not indicate otherwise… . .
Austin Hill Country Reality, Inc. v. Palisades Plaza, Inc.,
948 S.W.2d 293 (Tex. 1997)
William Rushing Hemphill, Geoffrey D. Weisbart, David F. Minton, Barry K. Bishop, Austin, for Petitioners.
Kenneth D. Lerner, Austin, for Respondent.
Spector, Justice, delivered the opinion for a unanimous Court.
We overrule the motion for rehearing. We withdraw our opinion of January 10, 1997, and substitute the following in its place.
The issue in this case is whether a landlord has a duty to make reasonable efforts to mitigate damages when a tenant defaults on a lease. The court of appeals held that no such duty exists at common law. 938 S.W.2d 469. We hold today that a landlord has a duty to make reasonable efforts to mitigate damages. Accordingly, we reverse the judgment of the court of appeals and remand for a new trial.
Palisades Plaza, Inc., owned and operated an office complex consisting of four office buildings in Austin. Barbara Hill, Annette Smith, and David Jones sold real estate in Austin as a Re/Max real estate brokerage franchise operating through Austin Hill Country Realty, Inc. On September 15, 1992, the Palisades and Hill Country executed a five-year commercial office lease for a suite in the Palisades’ office complex. An addendum executed in connection with the lease set the monthly base rent at $3,128 for the first year, $3,519 for the second and third years, and $3,910 for the fourth and fifth years. The parties also signed an improvements agreement that called for the Palisades to convert the shell office space into working offices for Hill Country. The lease was to begin on the “commencement date,” which was defined in the lease and the improvements agreement as either (1) the date that Hill Country occupied the suite, or (2) the date that the Palisades substantially completed the improvements or would have done so but for “tenant delay.” All parties anticipated that the lease would begin on November 15, 1992.
By the middle of October 1992, the Palisades had nearly completed the improvements. Construction came to a halt on October 21, 1992, when the Palisades received conflicting instructions about the completion of the suite from Hill on one hand and Smith and Jones on the other. By two letters, the Palisades informed Hill Country, Hill, Smith, and Jones that it had received conflicting directives and would not continue with the construction until Hill, Smith, and Jones collectively designated a single representative empowered to make decisions for the trio. Hill, Smith, and Jones did not reply to these letters.
In a letter dated November 19, 1992, the Palisades informed Hill Country, Hill, Smith, and Jones that their failure to designate a representative was an anticipatory breach of contract. The parties tried unsuccessfully to resolve their differences in a meeting. The Palisades then sued Hill Country, Hill, Smith, and Jones (collectively, “Hill Country”) for anticipatory breach of the lease.
At trial, Hill Country attempted to prove that the Palisades failed to mitigate the damages resulting from Hill Country’s alleged breach. In particular, Hill Country introduced evidence that the Palisades rejected an offer from Smith and Jones to lease the premises without Hill, as well as an offer from Hill and another person to lease the premises without Smith and Jones. Hill Country also tried to prove that, while the Palisades advertised for tenants continuously in a local newspaper, it did not advertise in the commercial-property publication “The Flick Report” as it had in the past. Hill Country requested an instruction asking the jury to reduce the Palisades’ damage award by “any amount that you find the [Palisades] could have avoided by the exercise of reasonable care.” The trial judge rejected this instruction, stating, “Last time I checked the law, it was that a landlord doesn’t have any obligation to try to fill the space.” The jury returned a verdict for the Palisades for $29,716 in damages and $16,500 in attorney’s fees. The court of appeals affirmed that judgment. 938 S.W.2d 469.
In its only point of error, Hill Country asks this Court to recognize a landlord’s duty to make reasonable efforts to mitigate damages when a tenant breaches a lease. This Court’s most recent, and most thorough, discussion of mitigation appeared in Brown v. RepublicBank First National Midland, 766 S.W.2d 203 (Tex.1988). The issues in Brown were whether a termination right in one contract was impliedly included in a sublease agreement between the same parties and, if not, whether the landlord had a duty to mitigate damages upon the tenant’s breach. Id. at 204. We held that the termination right was incorporated into the sublease. Id. The tenant thus had properly terminated the sublease agreement, and we did not reach the mitigation issue. Id.
Five justices of this Court, however, expressed that they would hold that a landlord has a duty to mitigate damages after a tenant defaults. Id. at 204 (Kilgarlin, J., concurring, joined by Spears, Gonzalez, and Mauzy, JJ.); id. at 207-08 (Phillips, C.J., dissenting). The concurrence emphasized the contractual nature of modern leases, noting that a covenant to pay rent is like any other contractual promise to pay. Id. at 206 (citing Schneiker v. Gordon, 732 P.2d 603, 610 (Colo.1987)). The concurring justices and the dissenting Chief Justice concluded that public policy requires a landlord, like all other aggrieved parties to a contract, to mitigate damages. Id. at 206 (Kilgarlin, J., concurring); id. at 207-08 (Phillips, C.J., dissenting).
Today we face the issue that Brown did not reach: whether a landlord has a duty to make reasonable efforts to mitigate damages upon the tenant’s breach. Because there is no statute addressing this issue, we look to the common law. John F. Hicks, The Contractual Nature of Real Property Leases, 24 BAYLOR L.REV. 443, 446-53 (1972).
The traditional common law rule regarding mitigation dictates that landlords have no duty to mitigate damages. See Dawn R. Barker, Note, Commercial Landlords’ Duty upon Tenants’ Abandonment–To Mitigate?, 20 J. Corp. L. 627, 629 (1995). This rule stems from the historical concept that the tenant is owner of the property during the lease term; as long as the tenant has a right to possses the land, the tenant is liable for rent. See Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896, 902, 905 (Utah 1989). Under this rule, a landlord is not obligated to undertake any action following a tenant’s abandonment of the premises but may recover rents periodically for the remainder of the term. See Gruman v. Investors Diversified Servs., 247 Minn. 502, 78 N.W.2d 377, 379-80 (1956).
In Texas, the traditional common law rule was first adopted in Racke v. Anheuser-Busch Brewing Ass’n, 17 Tex.Civ.App. 167, 42 S.W. 774, 775 (Galveston 1897, no writ). In Racke, a landlord sued to determine the extent of the tenant’s liability for holding over past the lease term. Concluding that the holdover rendered the tenant liable under a new tenancy for one year, the Court of Civil Appeals held that the landlord could not “be subjected to damages for failing to let the premises to another, to prevent rents accruing the [tenant].” Id.
Texas courts have consistently followed this no-mitigation rule in cases involving a landlord’s suit for past due rent. See, e.g., Metroplex Glass Ctr., Inc. v. Vantage Properties, Inc., 646 S.W.2d 263, 265 (Tex.App.– Dallas 1983, writ ref’d n.r.e.); Apex Co. v. Grant, 276 S.W. 445, 447 (Tex.Civ.App.– Dallas 1925, writ ref’d); see generally E.L. Kellett, Annotation, Landlord’s Duty, On Tenant’s Failure to Occupy, or Abandonment of, Premises, to Mitigate Damages by Accepting or Procuring Another Tenant, 21 A.L.R.3d 534, 555-56 (1968).
Some Texas courts have, however, required a landlord to mitigate damages when the landlord seeks a remedy that is contractual in nature, such as anticipatory breach of contract, rather than a real property cause of action. See Employment Advisors, Inc. v. Sparks, 364 S.W.2d 478, 480 (Tex.Civ.App.– Waco), writ ref’d n.r.e. per curiam, 368 S.W.2d 199, 200 (Tex.1963); see also Evons v. Winkler, 388 S.W.2d 265, 269 (Tex.Civ. App.-Corpus Christi 1965, writ ref’d n.r.e.). In Sparks, the landlord sued the tenant for anticipatory repudiation of the lease. The court of appeals observed that, because the landlord pursued a contractual remedy, the landlord’s damage recovery was “subject, of course, to the usual rules concerning mitigation.” 364 S.W.2d at 480. In refusing writ per curiam, this Court expressed no opinion on the appellate court’s holding. 368 S.W.2d at 200.
Other Texas courts have required a landlord to mitigate damages when the landlord reenters or resumes control of the premises. See John Church Co. v. Martinez, 204 S.W. 486, 489 (Tex.Civ.App.–Dallas 1918, writ ref’d); Robinson Seed & Plant Co. v. Hexter & Kramer, 167 S.W. 749, 751 (Tex.Civ. App.–Dallas 1914, writ ref’d). Thus, a landlord currently may be subject to a mitigation requirement depending upon the landlord’s actions following breach and the type of lawsuit the landlord pursues.
In discerning the policy implications of a rule requiring landlords to mitigate damages, we are informed by the rules of other jurisdictions. Forty-two states and the District of Columbia have recognized that a landlord has a duty to mitigate damages in at least some situations: when there is a breach of a residential lease, a commercial lease, or both.1
Those jurisdictions recognizing a duty to mitigate have emphasized the change in the nature of landlord-tenant law since its inception in medieval times. At English common law, the tenant had only contractual rights against the landlord and therefore could not assert common-law real property causes of action to protect the leasehold. Over time, the courts recognized a tenant’s right to bring real property causes of action, and tenants were considered to possess an estate in land. 2 R. POWELL, THE LAW OF REAL PROPERTY § 221, at 16-18 (1969). The landlord had to give the tenant possession of the land, and the tenant was required to pay rent in return. As covenants in leases have become more complex and the structures on the land have become more important to the parties than the land itself, courts have begun to recognize that a lease possesses elements of both a contract and a conveyance. See, e.g., Schneiker v. Gordon, 732 P.2d 603, 607-09 (Colo.1987); Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896, 902, 904 (Utah 1989). Under contract principles, the lease is not a complete conveyance to the tenant for a specified term such that the landlord’s duties are fulfilled upon deliverance of the property to the tenant. Rather, a promise to pay in a lease is essentially the same as a promise to pay in any other contract, and a breach of that promise does not necessarily end the landlord’s ongoing duties. Schneiker, 732 P.2d at 610; Wright v. Baumann, 239 Or. 410, 398 P.2d 119, 121 (1965). Because of the contractual elements of the modern lease agreement, these courts have imposed upon the landlord the contractual duty to mitigate damages upon the tenant’s breach.
Public policy offers further justification for the duty to mitigate. First, requiring mitigation in the landlord-tenant context discourages economic waste and encourages productive use of the property. As the Colorado Supreme Court has written:
Under traditional property law principles a landlord could allow the property to remain unoccupied while still holding the abandoning tenant liable for rent. This encourages both economic and physical waste. In no other context of which we are aware is an injured party permitted to sit idly by and suffer avoidable economic loss and thereafter to visit the full adverse economic consequences upon the party whose breach initiated the chain of events causing the loss.
Schneiker, 732 P.2d at 610. A mitigation requirement thus returns the property to productive use rather than allowing it to remain idle. Public policy requires that the law “discourage even persons against whom wrongs have been committed from passively suffering economic loss which could be averted by reasonable efforts.” Wright, 398 P.2d at 121 (quoting C. McCORMICK, HANDBOOK ON THE LAW OF DAMAGES, § 33 (1935)).
Second, a mitigation rule helps prevent destruction of or damage to the leased property. If the landlord is encouraged to let the property remain unoccupied, “the possibility of physical damage to the property through accident or vandalism is increased.” Schneiker, 732 P.2d at 610.
Third, the mitigation rule is consistent with the trend disfavoring contract penalties. Reid, 776 P.2d at 905-06. Courts have held that a liquidated damages clause in a contract must represent a reasonable estimate of anticipated damages upon breach. See, e.g., Warner v. Rasmussen, 704 P.2d 559, 561, 563 (Utah 1985). “Similarly, allowing a landlord to leave property idle when it could be profitably leased and forc[ing] an absent tenant to pay rent for that idled property permits the landlord to recover more damages than it may reasonably require to be compensated for the tenant’s breach. This is analogous to imposing a disfavored penalty upon the tenant.” Reid, 776 P.2d at 905-06.
Finally, the traditional justifications for the common law rule have proven unsound in practice. Proponents of the no-mitigation rule suggest that the landlord-tenant relationship is personal in nature, and that the landlord therefore should not be forced to lease to an unwanted tenant. See Wohl v. Yelen, 22 Ill.App.2d 455, 161 N.E.2d 339, 343 (1959). Modern lease arrangements, however, are rarely personal in nature and are usually business arrangements between strangers. Edwin Smith, Jr., Comment, Extending the Contractual Duty to Mitigate Damages to Landlords when a Tenant Abandons the Lease, 42 BAYLOR L.REV. 553, 559 (1990). Further, the landlord’s duty to make reasonable efforts to mitigate does not require that the landlord accept replacement tenants who are financial risks or whose business was precluded by the original lease. Note, Landlord and Tenant–Mitigation of Damages, 45 Wash.L.Rev. 218, 225 (1970).
The overwhelming trend among jurisdictions in the United States has thus been toward requiring a landlord to mitigate damages when a tenant abandons the property in breach of the lease agreement. Those courts adopting a mitigation requirement have emphasized the contractual elements of a lease agreement, the public policy favoring productive use of property, and the practicalities of the modern landlord-tenant arrangement as supporting such a duty.
We are persuaded by the reasoning of those courts that recognize that landlords must mitigate damages upon a tenant’s abandonment and failure to pay rent. This Court has recognized the dual nature of a lease as both a conveyance and a contract. See Davidow v. Inwood North Prof’l Group–Phase I, 747 S.W.2d 373, 375-76 (Tex.1988); Kamarath v. Bennett, 568 S.W.2d 658, 660-61 (Tex. 1978). Under a contract view, a landlord should be treated no differently than any other aggrieved party to a contract. Further, the public policy of the state of Texas calls for productive use of property as opposed to avoidable economic waste. Brown, 766 S.W.2d at 204 (Kilgarlin, J., concurring). As Professor McCormick wrote over seventy years ago, the law
which permits the landlord to stand idly by the vacant, abandoned premises and treat them as the property of the tenant and recover full rent, [should] yield to the more realistic notions of social advantage which in other fields of the law have forbidden a recovery for damages which the plaintiff by reasonable efforts could have avoided.
Charles McCormick, The Rights of the Landlord Upon Abandonment of the Premises by the Tenant, 23 Mich.L.Rev. 211, 221-22 (1925). Finally, we have recognized that contract penalties are disfavored in Texas. Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 486 (1952) (landlord should not receive more or less than actual damages upon tenant’s breach). A landlord should not be allowed to collect rent from an abandoning tenant when the landlord can, by reasonable efforts, relet the premises and avoid incurring some damages. We therefore recognize that a landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property, unless the commercial landlord and tenant contract otherwise.
To ensure the uniform application of this duty by the courts of this state, and to guide future landlords and tenants in conforming their conduct to the law, we now consider several practical considerations that will undoubtedly arise. We first consider the level of conduct by a landlord that will satisfy the duty to mitigate. The landlord’s mitigation duty has been variously stated in other jurisdictions. See, e.g., Reid, 776 P.2d at 906 (“objective commercial reasonableness”); Schneiker, 732 P.2d at 611 (“reasonable efforts”); Cal. Civ.Code § 1951.2(c)(2) (“reasonably and in a good-faith effort”). Likewise, the courts of this state have developed differing language regarding a party’s duty to mitigate in other contexts. See City of San Antonio v. Guidry, 801 S.W.2d 142, 151 (Tex.App.–San Antonio 1990, no writ) (collecting cases). We hold that the landlord’s duty to mitigate requires the landlord to use objectively reasonable efforts to fill the premises when the tenant vacates in breach of the lease.
We stress that this is not an absolute duty. The landlord is not required to simply fill the premises with any willing tenant; the replacement tenant must be suitable under the circumstances. Nor does the landlord’s failure to mitigate give rise to a cause of action by the tenant. Rather, the landlord’s failure to use reasonable efforts to mitigate damages bars the landlord’s recovery against the breaching tenant only to the extent that damages reasonably could have been avoided. Similarly, the amount of damages that the landlord actually avoided by releasing the premises will reduce the landlord’s recovery.
Further, we believe that the tenant properly bears the burden of proof to demonstrate that the landlord has mitigated or failed to mitigate damages and the amount by which the landlord reduced or could have reduced its damages. The traditional rule in other contexts is that the breaching party must show that the nonbreaching party could have reduced its damages. See, e.g., Sorbus, Inc. v. UHW Corp., 855 S.W.2d 771, 775 (Tex.App.–El Paso 1993, writ denied) (mitigation of damages following tortious interference with contract); Texas Dep’t of Human Servs. v. Green, 855 S.W.2d 136, 151 (Tex. App.–Austin 1993, writ denied) (mitigation of damages following wrongful discharge); see generally E. ALLEN FARNSWORTH, CONTRACTS § 12.12 (2d ed. 1990). In the landlord-tenant context, although there is some split of authority, many other jurisdictions have placed the burden of proving mitigation or failure to mitigate upon the breaching tenant. See Barker, 20 J. Corp. L. at 639 n. 86.
When the tenant contends that the landlord has actually mitigated damages, the breaching tenant need not plead the landlord’s actual mitigation as an affirmative defense. Rather, the tenant’s evidence of the landlord’s mitigation tends to rebut the measure of damages under the landlord’s claim of breach and may be admitted under a general denial. See Greater Fort Worth & Tarrant County Community Action Agency v. Mims, 627 S.W.2d 149, 151 (Tex.1982). The tenant’s contention that the landlord failed to mitigate damages, in contrast, is similar to an avoidance defense; evidence of failure to mitigate is admissible only if the tenant pleads the failure to mitigate as an affirmative defense. W.L. Moody & Co. v. Rowland, 100 Tex. 363, 99 S.W. 1112, 1114-16 (1907); see also Professional Servs., Inc. v. Amaitis, 592 S.W.2d 396, 397 (Tex.Civ.App.–Dallas 1979, writ ref’d n.r.e.).
The final issue to resolve regarding the duty to mitigate is to which types of actions by the landlord the duty will apply. Traditionally, Texas courts have regarded the landlord as having four causes of action against a tenant for breach of the lease and abandonment. See Speedee Mart v. Stovall, 664 S.W.2d 174, 177 (Tex.App.–Amarillo 1983, no writ); Jerry D. Johnson, Landlord Remedies in Texas: Confusion Reigns Where Certainty Should Prevail, 33 S. Tex. L.Rev. 417, 419-20 (1992). First, the landlord can maintain the lease, suing for rent as it becomes due. Second, the landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the present value of future rentals reduced by the reasonable cash market value of the property for the remainder of the lease term. Third, the landlord can treat the breach as anticipatory, repossess, release the property, and sue the tenant for the difference between the contractual rent and the amount received from the new tenant. Fourth, the landlord can declare the lease forfeited (if the lease so provides) and relieve the tenant of liability for future rent. Speedee Mart, 664 S.W.2d at 177.
The landlord must have a duty to mitigate when suing for anticipatory repudiation. Because the cause of action is contractual in nature, the contractual duty to mitigate should apply. The landlord’s option to maintain the lease and sue for rent as it becomes due, however, is more troubling. To require the landlord to mitigate in that instance would force the landlord to reenter the premises and thereby risk terminating the lease or accepting the tenant’s surrender. See Johnson, 33 S. Tex.L.Rev. at 437; Hicks, 24 Baylor L.Rev. at 517. We thus hold that, when exercising the option to maintain the lease in effect and sue for rent as it becomes due following the tenant’s breach and abandonment, the landlord has a duty to mitigate only if (1) the landlord actually reenters, or (2) the lease allows the landlord to reenter the premises without accepting surrender, forfeiting the lease, or being construed as evicting the tenant. See Robinson Seed & Plant Co. v. Hexter & Kramer, 167 S.W. 749, 751 (Tex.Civ.App.–Dallas 1914, writ ref’d); 21 A.L.R.3d at 556-63. A suit for anticipatory repudiation, an actual reentry, or a contractual right of reentry subject to the above conditions will therefore give rise to the landlord’s duty to mitigate damages upon the tenant’s breach and abandonment.
In their first amended answer, Hill Country and Barbara Hill specifically contended that the Palisades failed to mitigate its damages. Because the court of appeals upheld the trial court’s refusal to submit their mitigation instruction, we reverse the judgment of the court of appeals and remand for a new trial.
- Lennon v. United States Theatre Corp., 920 F.2d 996, 1000 (D.C.Cir.1990) (holding that both residential and commercial landlords have duty to mitigate); ALASKA STAT. § 34.03.230(c) (Michie 1990) (residential); ARIZ.REV.STAT.ANN. § 33-1370 (West 1974) (residential); Tempe Corporate Office Bldg. v. Arizona Funding Servs., 167 Ariz. 394, 807 P.2d 1130, 1135 (App.1991)(commercial); Baston v. Davis, 229 Ark. 666, 318 S.W.2d 837, 841 (1958) (commercial); CAL.CIV.CODE § 1951.2(a)(2), (c)(2) (West 1985) (residential); Sanders Constr. Co. v. San Joaquin First Fed. Sav. & Loan Ass’n, 136 Cal.App.3d 387, 186 Cal.Rptr. 218, 226 (1982) (commercial); Schneiker v. Gordon, 732 P.2d 603, 611 (Colo.1987) (commercial); Danpar Assocs. v. Somersville Mills Sales Room, Inc., 182 Conn. 444, 438 A.2d 708, 710 (1980) (commercial); DEL.CODE ANN. tit. 25, § 5507 (1996) (residential), DEL.CODE ANN. tit. 25, §§ 5101, 5507(d) (1996) (commercial); FLA.STAT. ANN. § 83.595 (West 1995) (residential); In re PAVCO Enters., Inc., 172 B.R. 114, 117 (Bankr. M.D.Fla.1994) (commercial); HAW.REV.STAT. § 521-70(d) (Supp.1975) (residential); Marco Kona Warehouse v. Sharmilo, Inc., 7 Haw.App. 383, 768 P.2d 247, 251, cert. denied, 70 Haw. 665, 796 P.2d 501 (1989) (commercial); Olsen v. Country Club Sports, Inc., 110 Idaho 789, 718 P.2d 1227, 1232-33 (App.1985) (commercial); 735 ILL.COMP.STAT. 5/9-213.1 (West 1992) (residential and commercial); Nylen v. Park Doral Apartments, 535 N.E.2d 178, 183 (Ind.Ct.App. 1989) (residential); Sandor Dev. Co. v. Reitmeyer, 498 N.E.2d 1020, 1023 (Ind.Ct.App.1986) (commercial); Hirsch v. Merchants Nat’l Bank & Trust Co. of Ind., 166 Ind.App. 497, 336 N.E.2d 833, 836 (1975) (commercial); IOWA CODE § 562A.29(3) (1996) (residential); Harmsen v. Dr. MacDonald’s, Inc., 403 N.W.2d 48, 51 (Iowa.Ct. App.1987) (commercial); KAN.STAT.ANN. §§ 58-2532 to -2567 (1976)(residential); Gordon v. Consolidated Sun Ray, Inc., 195 Kan. 341, 404 P.2d 949, 953-54 (1965) (commercial); KY.REV. STAT.ANN. § 383.670(3) (Michie 1994) (residential); Gray v. Kanavel, 508 So.2d 970, 973 (La.Ct. App.1987) (residential); LA.CIV.CODE ANN. art. 2002 (West 1990) (commercial); ME.REV.STAT. ANN. tit. 14, § 6010-A (West 1995) (residential and commercial); MD.CODE ANN., REAL PROP. § 8-207 (1995) (residential); Atkinson v. Rosenthal, 33 Mass.App.Ct. 219, 598 N.E.2d 666, 669 (1992) (commercial); Jefferson Dev. Co. v. Heritage Cleaners, 109 Mich.App. 606, 311 N.W.2d 426, 428 (1981) (commercial); MRI Northwest Rentals Invs. v. Schnucks-Twenty-Five. Inc., 807 S.W.2d 531, 534 (Mo.Ct.App.1991)(limited duty in commercial leases); MONT.CODE ANN. § 70-24-426 (1995); Properties Inv. Group of Mid-America v. JBA, Inc., 242 Neb. 439, 495 N.W.2d 624, 628-29 (1993) (commercial); NEV.REV.STAT. § 118.175 (1991) (residential); Deasy v. Dernham Co. (In re Blondheim Modular Mfg., Inc.), 65 B.R. 856, 861 (Bankr.D.N.H.1986) (residential and commercial); Sommer v. Kridel, 74 N.J. 446, 378 A.2d 767, 768 (1977) (residential); McGuire v. City of Jersey City, 125 N.J. 310, 593 A.2d 309, 314 (1991) (commercial); N.M.STAT.ANN. § 47-8-6 (Michie 1978) (residential); Isbey v. Crews, 55 N.C.App. 47, 284 S.E.2d 534, 537 (1981)(residential); Weinstein v. Griffin, 241 N.C. 161, 84 S.E.2d 549, 552 (1954) (commercial); N.D.CENT. Code § 47-16-13.4 to .5 (1993) (residential); MAR-SON, Inc. v. Terwaho Enters., 259 N.W.2d 289, 291-92 (N.D.1977) (commercial); Stern v. Taft, 49 Ohio App.2d 405, 361 N.E.2d 279, 281 (1976) (residential); Master Lease of Ohio, Inc. v. Andrews, 20 Ohio App.3d 217, 485 N.E.2d 820, 823 (1984) (commercial); OKLA.STAT.ANN. tit. 41, § 129 (West 1986) (residential); Carpenter v. Riddle, 527 P.2d 592, 594 (Okla.1974) (limited duty in commercial leases); OR.REV.STAT. § 90.410 (1995) (residential); United States Nat’l Bank of Oregon v. Homeland, Inc., 291 Or. 374, 631 P.2d 761, 765 (1981) (commercial); In re New York City Shoes, Inc., 86 B.R. 420, 424 (Bankr.E.D.Pa. 1988) (commercial); R.I. GEN. LAWS § 34-18-40 (1994) (residential); Lovell v. Kevin J. Thornton Enters., Inc. (In re Branchaud), 186 B.R. 337, 340 (Bankr.D.R.I.1995) (commercial); S.C.Code Ann. § 27-40-730 (Law Co-op.1993) (residential); United States Rubber Co. v. White Tire Co., 231 S.C. 84, 97 S.E.2d 403, 409 (1956) (commercial); TENN.CODE ANN. § 66-28-515 (1995) (residential); Jaffe v. Bolton, 817 S.W.2d 19, 26-27 (Tenn.Ct. App.1991) (commercial); Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896, 906 (Utah 1989) (residential and commercial); O’Brien v. Black, 162 Vt. 448, 648 A.2d 1374, 1376 (1994) (commercial); Va.Code Ann. tit. 55 § 248.35 (Michie 1995) (residential); WASH.REV.CODE § 59.18.310 (1990) (residential); Hargis v. Mel-Mad Corp., 46 Wash. App. 146, 730 P.2d 76, 79 (1986) (commercial); WIS. STAT. § 704.29 (1993-94) (residential); First Wis. Trust Co. v. L. Wiemann Co., 93 Wis.2d 258, 286 N.W.2d 360, 366 (1980) (commercial); System Terminal Corp. v. Cornelison, 364 P.2d 91, 95 (Wyo.1961) (commercial). See generally 52 C.J.S. Landlord and Tenant § 498 (1968); 21 AM.JUR. 3d Damages–Mitigation by Landlord §§ 1-9 (1968 & Supp.1994); 5 A. CORBIN, CORBIN ON CONTRACTS § 1039A (Supp.1993).
- Ryals v. Laney, 338 So.2d 413, 415 (Ala.Civ. App.1976) (holding that there is no duty to mitigate in residential leases); Crestline Ctr. v. Hinton, 567 So.2d 393, 396 (Ala.Civ.App.1990) (commercial); Love v. McDevitt, 114 Ga.App. 734, 152 S.E.2d 705, 706 (1966) (residential); Lamb v. Decatur Fed. Sav. & Loan Ass’n, 201 Ga.App. 583, 411 S.E.2d 527, 530 (1991) (commercial); em>Markoe v. Naiditch & Sons, 303 Minn. 6, 226 N.W.2d 289, 291 (1975) (residential and commercial); Alsup v. Banks, 68 Miss. 664, 9 So. 895, 895 (1891) (residential); Duda v. Thompson, 169 Misc.2d 649, 647 N.Y.S.2d 401, 403-04 (N.Y.Sup.Ct.1996) (residential); Holy Properties, Ltd. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130, 637 N.Y.S.2d 964, 661 N.E.2d 694, 696 (1995) (commercial); Arbenz v. Exley, Watkins & Co., 52 W.Va. 476, 44 S.E. 149, 151 (1903) (commercial). Mississippi has reported no cases regarding a commercial landlord’s duty to mitigate, and West Virginia has reported no cases regarding a residential landlord’s duty to mitigate.
- South Dakota has apparently reported no cases on this issue.
Nobles v. Jiffy Market Food Store Corp.,
579 S.E.2d 63 (Ga. Ct. App. 2003)
Ellis, Painter, Ratterree & Bart, Tracy A. O’Connell, Savannah, Ansley B. Threlkeld, for appellant.
Whelchel, Brown, Readdick & Bumgartner, Gregory T. Carter, Brunswick, for appellees.
Landlord Marcus H. Nobles, Jr. sued tenants the Jiffy Market Food Store Corporation, Keith Strickland, and Gladys Strickland (collectively Jiffy Market) for breach of several lease agreements. Among the damages Nobles sought were future lease payments under an acceleration clause in one of the agreements. The trial court granted in part Jiffy Market’s motion for summary judgment, ruling that the acceleration clause was invalid. The court also denied Nobles’s motion for partial summary judgment. Nobles appeals both rulings. Finding no error, we affirm.
The record shows that in September 1995, Jiffy Market acquired from Nobles the franchise rights to a Huddle House restaurant in Richmond Hill. As part of the transaction, Nobles leased Jiffy Market the restaurant premises for a period of 22 years. The lease required Jiffy Market to make graduated monthly payments, repair the premises, pay applicable taxes, and maintain insurance. In addition to the premises lease, the parties also entered into separate agreements for the lease of restaurant equipment and exterior signs.
The parties later amended the premises lease twice to decrease the monthly lease payments and to reflect Jiffy Market’s sublease of the premises to a third party. Both amendments ratified the original lease agreement.
Two paragraphs of the premises lease agreement addressed Nobles’s remedies in the event of a default by Jiffy Market. Under Paragraph 27, if Jiffy Market defaulted on its obligations after written notice by Nobles, then Nobles
at his option may at once, or within six (6) months thereafter (but only once during continuance of such default or condition[)], terminate this lease by written notice to [Jiffy Market]; whereupon this Lease shall end…. Upon such termination by [Nobles, Jiffy Market] will at once surrender possession of the premises to [Nobles]…. In addition, [Nobles] may also collect, as damages, the remaining rent due or to become due under this Lease for the remainder of the term, less any amounts derived by [Nobles] from re-leasing the Premises.1
Paragraph 28, titled “Reletting by Lessor,” provided that
[Nobles], as [Jiffy Market’s] agent, without terminating this Lease, upon [Jiffy Market’s] breach of this Lease, in such a manner as to authorize termination as provided herein, may at [Nobles’s] option enter upon and rent Premises at the best price obtainable by reasonable effort, without advertisement and by private negotiations and for any term [Nobles] deems proper. [Nobles] shall make reasonable efforts to relet the Premises. [Jiffy Market] shall be liable to [Nobles] for the deficiency, if any, between [Jiffy Market’s] rent hereunder and the price obtained by [Nobles] on reletting.
In September 2000, the restaurant ceased operations. On October 10, Nobles sent Jiffy Market a letter demanding that month’s lease payment and stating that if payment was not received by October 20, he would declare default and seek “all sums due under the Lease.” No payment was made. On February 15, Jiffy Market returned the premises to Nobles. Nobles claims that much of the equipment was broken or missing and that the signs required repair.
Nobles sued Jiffy Market for all future payments under the remaining 18 years of the lease term, totaling $865,596. Nobles later relet the premises to another tenant, and he acknowledged that any recovery of future rents under his lease with Jiffy Market would be offset by payments received under the new lease. In addition to future rent, Nobles also sought damages from Jiffy Market for breach of the equipment and sign leases, repayment of the rent reductions allowed under the first lease amendment, and reimbursement of insurance and tax payments.
Nobles sought partial summary judgment, arguing that the record clearly showed that Jiffy Market had breached the lease agreements, entitling him to damages. Jiffy Market also moved for summary judgment, claiming that Paragraph 27 of the premises agreement providing for recovery of future rent was an unenforceable penalty clause and that Nobles terminated the lease when he sought recovery under that paragraph, thereby ending Jiffy Market’s obligations. The trial court agreed that Paragraph 27 was unenforceable, but otherwise denied both motions.
We review the trial court’s ruling de novo, considering the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovant.2
1. Nobles first contends that the court erred in ruling that Paragraph 27 of the premises lease was an unenforceable penalty. We disagree.
This case is controlled by Peterson v. P.C. Towers, L.P.,3 in which we examined a commercial lease provision similar to Paragraph 27.4 We noted that while a tenant generally is not responsible for rent accruing after the landlord resumes possession, the parties may contract otherwise, provided that the lease agreement contains “an explicit and detailed provision … which clearly and unequivocally expresse[s] the parties’ intention to hold the [tenant] responsible for after-accrued rent.”5 Such “accelerated rent” provisions are enforceable as valid liquidated damages clauses if (1) the injury caused by breach of the lease is difficult or impossible to estimate accurately; (2) the parties intend to provide for damages rather than a penalty; and (3) the stipulated sum is a reasonable pre-estimate of the landlord’s probable loss.6 If these requirements are not met, then the accelerated rent provision “fails as a penalty.”7 Whether an accelerated rent provision is enforceable is a question of law for the court.8
In analyzing whether the accelerated rent provision in Peterson met the three requirements for a valid liquidated damages clause, we noted that
[t]he measure of damages in an action seeking to recover in advance for the full remaining term of a breached lease is the difference between what the tenant would have had to pay in rent for the balance of the term, and the fair rental value of the premises for the balance of the term. [Cit.]9
Because these figures would be difficult to estimate accurately, we concluded that the first requirement was satisfied. But the accelerated rent provision failed to calculate damages “based on the future rental value of the premises, and the likelihood of reletting.”10 Therefore, it provided the landlord “with payment potentially bearing no reasonable relation to actual damages,”11 and we held that it was an unenforceable penalty.
Paragraph 27 of the agreement between Nobles and Jiffy Market suffers from the same deficiency. It contained no “assessment of future market conditions for the premises to account for future rental value, and the probability of reletting the premises for all or part of the remaining term.”12 This deficiency is especially acute in light of the length of the lease. Nobles attempted to collect approximately 18 years of unaccrued rent–almost 200 payments–at once. But neither the lease nor any evidence cited to this court attempted to determine whether these up-front payments would bear any reasonable relationship to Nobles’s actual future damages, and it is difficult to infer such a relationship given the lengthy lease period. The damages Nobles sought were entirely too speculative and uncertain.
Moreover, Paragraph 27 did not provide that the future rent be reduced to present value13 –another indication of a potentially large gulf between the sums authorized by that paragraph and the amount of Nobles’s actual damages. Finally, the lease did not require that Nobles try to relet the premises in the event of Jiffy Market’s default. Rather, reletting was solely “at [Nobles’s] option.”14 Thus, the lease gave Nobles both present possession of the premises and all future rent. This, as we noted in Jones v. Clark,15 “is manifestly unreasonable and oppressive.”16 For these reasons, the trial court correctly ruled that the accelerated rent clause in Paragraph 27 operated as an unenforceable penalty rather than a valid liquidated damages provision.
Nobles cites American Med. Transport Group v. Glo-An, Inc.,17Rucker v. Wynn,18 and Hardin v. Macon Mall,19 in which we enforced accelerated rent provisions in commercial leases as valid liquidated damages provisions. But these cases are distinguishable.
In American Med. Transport, the tenant defaulted on two leases with 24-month terms after ten months of the terms had elapsed.20 After placing a “for lease” sign on the premises and reletting one of the suites, the landlord sought twelve months of unaccrued rent on one lease and one month on the other.21 In Rucker, the tenant defaulted on a five-year lease after six months had elapsed, and the landlord sought the difference between unaccrued rent for the remainder of the lease term and rent generated by reletting the premises.22 In Hardin, the tenant defaulted after six years of a 15-year lease had elapsed, but after finding a new tenant, the landlord sought only two years of unaccrued rent under the lease’s accelerated rent clause.23 Because the landlords in these cases sought unaccrued rent only for relatively brief periods of time, it is far more likely that such rent represented a reasonable pre-estimate of the landlords’ losses. These cases, therefore, did not involve the speculation and uncertainty inherent here, where Nobles wants unaccrued rent for the remarkable period of 18 years.
Nobles also cites Ott v. Vineville Market,24 in which we upheld a landlord’s charge of accelerated rent against a defaulting tenant, for the proposition that accelerated rent provisions are not liquidated damages provisions and thus cannot be rejected as unenforceable penalties. But Ott did not describe the lease provisions that authorized the charge of unaccrued rent, so its conclusion must be limited to its unspecified facts.25 We follow our more recent decision in Peterson, which holds that an accelerated rent provision similar to the one here “either qualifies as an enforceable liquidated damages provision, or it fails as a penalty.”26
2. Next, Nobles argues that even if Paragraph 27 did not entitle him to collect accelerated rent, Paragraph 28 did. Although the trial court did not address this argument, we will do so because it was presented below.
Paragraph 28 provided that if Nobles relet the premises without terminating the lease, Jiffy Market would be liable for any deficiency between the rent it owed under the lease and the price obtained by Nobles on reletting. Paragraph 27, on the other hand, allowed accelerated rent only if Nobles terminated the lease. Thus, either Nobles terminated the lease and Paragraph 27 applies, or he did not, and Paragraph 28 applies. Whether and when Nobles terminated the lease is a question of fact for the jury, and the trial court appropriately denied summary judgment on that issue.27
If Paragraph 28 applies, then we question whether it can be construed to authorize upfront collection of future, unaccrued rent for the 18-year remainder of the lease term. If it can be so construed, then it, too, is an unenforceable penalty. Like Paragraph 27, it fails to satisfy the requirements for a valid liquidated damages provision because it provides no assessment of future market conditions regarding the rental value of the property and the possibility of reletting.
3. Finally, Nobles contends that the trial court erred in failing to grant him summary judgment on his claim for two other kinds of damages. Again, we disagree.
(a) First, Nobles argues that he is entitled to repayment of a reduction in rent that Jiffy Market received under the first amendment to the lease agreement. That amendment decreased Jiffy Market’s monthly rent by $700. It also provided that if Jiffy Market “cease[d] to operate” a Huddle House restaurant on the premises before September 30, 2000, then it would have to repay Nobles $700 per month for each month that the reduction was in place. Because there was conflicting testimony whether the restaurant “operated” through September 30, summary judgment was not appropriate on this claim.
(b) Second, Nobles seeks repayment of certain taxes and insurance that he paid on the property, but that Jiffy Market should have paid under the premises lease. To support this claim, Nobles submitted his affidavit, which stated that he “paid $5,142.56 to Franklin Insurance Agency for property insurance and $3,002.00 to Travelers for flood insurance” for an unspecified period of coverage. The affidavit also stated that Nobles paid $2,440.53 in county taxes and $565.92 in local taxes on the property for the year 2000. Jiffy Market contends that Nobles terminated the lease, so it cannot collect any sums due thereunder. As noted, however, whether and when Nobles terminated the lease is a jury question. Whether the sums expended by Nobles fell within Jiffy Market’s obligations under the lease also is a jury question. The trial court properly denied summary judgment on this claim.
Andrews, P.J., and Mikell, J., concur.
- (Emphasis supplied.)
- See Sams v. Video Display Corp., 255 Ga.App. 478, 566 S.E.2d 28 (2002).
- 206 Ga.App. 591, 426 S.E.2d 243 (1992).
- The agreement in Peterson provided that if the lease was terminated due to the tenant’s default, the landlord could “‘declare the entire amount of the rent which would become due and payable during the remainder of the term of this lease to be due and payable immediately,’” with reduction to present cash value and offset by any rent the landlord received from reletting the premises. 206 Ga.App. at 592(2), 426 S.E.2d 243.
- (Citations and punctuation omitted.) Id. at 591-592, 426 S.E.2d 243.
- Id. at 593(3), 426 S.E.2d 243.
- Id. at 592, 426 S.E.2d 243.
- Id. at 592-593, 426 S.E.2d 243.
- Id. at 593, 426 S.E.2d 243.
- Id. at 594, 426 S.E.2d 243.
- After filing the complaint, Nobles reduced its asserted damages for future rent to present value, but we evaluate the validity of Paragraph 27 as it was written.
- After suing Jiffy Market for the full amount of all future rent, Nobles apparently did relet the premises, though for a shorter period of time and for less money than the Jiffy Market lease.
- 147 Ga.App. 657, 249 S.E.2d 619 (1978).
- Id. at 659(2), 249 S.E.2d 619; see also Carter v. Tokai Financial Svcs., 231 Ga.App. 755, 759(2), 500 S.E.2d 638 (1998) (accelerated rent clause in personal property lease was unenforceable under Peterson because it allowed lessor, after lessee’s default, to retain property yet collect all future rent payments).
- 235 Ga.App. 464, 509 S.E.2d 738 (1998).
- 212 Ga.App. 69, 441 S.E.2d 417 (1994).
- 169 Ga.App. 793, 315 S.E.2d 4 (1984).
- 235 Ga.App. at 464, 509 S.E.2d 738.
- Id. at 465, 509 S.E.2d 738.
- 212 Ga.App. at 69, 72(4), 441 S.E.2d 417.
- 169 Ga.App. at 793, 315 S.E.2d 4.
- 203 Ga.App. 80, 81(2), 416 S.E.2d 362 (1992).
- Ott also did not relate the term of the lease, when the tenant defaulted, or how much future rent the landlord sought. See id. at 80-81, 416 S.E.2d 362.
- 206 Ga.App. at 592, 426 S.E.2d 243.
- See Buford-Clairmont v. Jacobs Pharmacy Co., 131 Ga.App. 643, 647(1), 206 S.E.2d 674 (1974) (whether landlord’s actions constituted termination of lease was question for jury).
3.3. Landlord Duties
Blackett v. Olanoff,
358 N.E.2d 817 (1977)
Philip S. Lapatin, Boston, for plaintiffs.
Sally A. Corwin, Boston (Jon C. Mazuy, Boston, with her), for defendants.
Before Hennessey, C.J., and Braucher, Kaplan, and Wilkins, JJ.
The defendant in each of these consolidated actions for rent successfully raised constructive eviction as a defense against the landlords’ claim. The judge found that the tenants were ‘very substantially deprived’ of quiet enjoyment of their leased premises ’for a substantial time’ (emphasis original). He ruled that the tenants’ implied warranty of quiet enjoyment was violated by late evening and early morning music and disturbances coming from nearby premises which the landlords leased to others for use as a bar or cocktail lounge (lounge). The judge further found that, although the landlords did not intend to create the conditions, the landlords ‘had it within their control to correct the conditions which … amounted to a constructive eviction of each (tenant).’ He also found that the landlords promised each tenant to correct the situation, that the landlords made some attempt to remedy the problem, but they were unsuccessful, and that each tenant vacated his apartment within a reasonable time. Judgment was entered for each tenant; the landlords appealed; and we transferred the appeals here. We affirm the judgments.
The landlords argue that they did not violate the tenants’ implied covenant of quiet enjoyment because they are not chargeable with the noise from the lounge. The landlords do not challenge the judge’s conclusion that the noise emanating from the lounge was sufficient to constitute a constructive eviction, if that noise could be attributed to the landlords.1 Nor do the landlords seriously argue that a constructive eviction could not be found as matter of law because the lounge was not on the same premises as the tenants’ apartments. See 1 American Law of Property s 3.51 at 281 (A. J. Casner ed. 1952). The landlords’ principal contention, based on the denial of certain requests for rulings, is that they are not responsible for the conduct of the proprietors, employees, and patrons of the lounge.
Our opinions concerning a constructive eviction by an alleged breach of an implied covenant of quiet enjoyment sometimes have stated that the landlord must perform some act with the intent of depriving the tenant of the enjoyment and occupation of the whole or part of the leased premises. See Katz v. Duffy, 261 Mass. 149, 151-152, 158 N.E. 264 (1927), and cases cited. There are occasions, however, where a landlord has not intended to violate a tenant’s rights, but there was nevertheless a breach of the landlord’s covenant of quiet enjoyment which flowed as the natural and probable consequence of what the landlord did, what he failed to do, or what he permitted to be done. Charles E. Burt, Inc. v. Seven Grand Corp., 340 Mass. 124, 127, 163 N.E.2d 4 (1959) (failure to supply light, heat, power, and elevator services). Westland Housing Corp. v. Scott, 312 Mass. 375, 381, 44 N.E.2d 959 (1942) (intrusions of smoke and soot over a substantial period of time due to a defective boiler). Shindler v. Milden, 282 Mass. 32, 33-34, 184 N.E. 673 (1933) (failure to install necessary heating system, as agreed). Case v. Minot, 158 Mass. 577, 587, 33 N.E. 700 (1893) (landlord authorizing another lessee to obstruct the tenant’s light and air, necessary for the beneficial enjoyment of the demised premises). Skally v. Shute, 132 Mass. 367, 370-371 (1882) (undermining of a leased building rendering it unfit for occupancy). Although some of our opinions have spoken of particular action or inaction by a landlord as showing a presumed intention to evict, the landlord’s conduct, and not his intentions, is controlling. See Westland Housing Corp. v. Scott, supra, 312 Mass. at 382-383, 44 N.E. 959.
The judge was warranted in ruling that the landlords had it within their control to correct the condition which caused the tenants to vacate their apartments. The landlords introduced a commercial activity into an area where they leased premises for residential purposes. The lease for the lounge expressly provided that entertainment in the lounge had to be conducted so that it could not be heard outside the building and would not disturb the residents of the leased apartments. The potential threat to the occupants of the nearby apartments was apparent in the circumstances. The landlords complained to the tenants of the lounge after receiving numerous objections from residential tenants. From time to time, the pervading noise would abate in response to the landlord’s complaints. We conclude that, as matter of law, the landlords had a right to control the objectionable noise coming from the lounge and that the judge was warranted in finding as a fact that the landlords could control the objectionable conditions.
This situation is different from the usual annoyance of one residential tenant by another where traditionally the landlord has not been chargeable with the annoyance. See Katz v. Duffy, 261 Mass. 149, 158 N.E. 264 (1927) (illegal sale of alcoholic beverages); DeWitt v. Pierson, 112 Mass. 8 (1873) (prostitution).2 Here we have a case more like Case v. Minot, 158 Mass. 577, 33 N.E. 700 (1893), where the landlord entered into a lease with one tenant which the landlord knew permitted that tenant to engage in activity which would interfere with the rights of another tenant. There, to be sure, the clash of tenants’ rights was inevitable, if each pressed those rights. Here, although the clash of tenants’ interests was only a known potentiality initially, experience demonstrated that a decibel level for the entertainment at the lounge, acoustically acceptable to its patrons and hence commercially desirable to its proprietors, was intolerable for the residential tenants.
The rule in New York appears to be that the landlord may not recover rent if he has had ample notice of the existence of conduct of one tenant which deprives another tenant of the beneficial enjoyment of his premises and the landlord does little or nothing to abate the nuisance. See Cohen v. Werner, 85 Misc.2d 341, 342, 378 N.Y.S.2d 868 (N.Y.App.T.1975); Rockrose Associates v. Peters, 81 Misc.2d 971, 972, 366 N.Y.S.2d 567 (N.Y.Civ.Ct.1975) (office lease); Home Life Ins. Co. v. Breslerman, 168 Misc. 117, 118, 5 N.Y.S.2d 272 (N.Y.App.T.1938). But see comments in Trustees of the Sailors’ Snug Harbor in the City of New York v. Sugarman, 264 App.Div. 240, 241, 35 N.Y.S.2d 196 (N.Y.1942) (no nuisance).
A tenant with sufficient bargaining power may be able to obtain an agreement from the landlord to insert and to enforce regulatory restrictions in the leases of other, potentially offending, tenants. See E. Schwartz, Lease Drafting in Massachusetts s 6.33 (1961).
Because the disturbing condition was the natural and probable consequence of the landlords’ permitting the lounge to operate where it did and because the landlords could control the actions at the lounge, they should not be entitled to collect rent for residential premises which were not reasonably habitable. Tenants such as these should not be left only with a claim against the proprietors of the noisome lounge. To the extent that our opinions suggest a distinction between nonfeasance by the landlord, which has been said to create no liability (P. Hall, Massachusetts Law of Landlord and Tenant ss 90-91 (4th ed. 1949)), and malfeasance by the landlord, we decline to perpetuate that distinction where the landlord creates a situation and has the right to control the objectionable conditions.
- There was evidence that the lounge had amplified music (electric musical instruments and singing, at various times) which started at 9:30 P.M. and continued until 1:30 A.M. or 2 A.M., generally on Tuesdays through Sundays. The music could be heard through the granite walls of the residential tenants’ building, and was described variously as unbelievably loud, incessant, raucous, and penetrating. The noise interfered with conversation and prevented sleep. There was also evidence of noise from patrons’ yelling and fighting.
- The general, but not universal, rule, in this country is that a landlord is not chargeable because one tenant is causing annoyance to another ( A. H. Woods Theatre v. North American Union, 246 Ill.App. 521, 526-527, (1927) (music from one commercial tenant annoying another commercial tenant’s employees)), even where the annoying conduct would be a breach of the landlord’s covenant of quiet enjoyment if the landlord were the miscreant. See Paterson v. Bridges, 16 Ala.App. 54, 55, 75 So. 260 (1917); Thompson v. Harris, 9 Ariz.App. 341, 345, 452 P.2d 122 (1969), and cases cited; 1 American Law of Property s 3.53 (A.J. Casner ed. 1952); Annot., 38 A.L.R. 250 (1925). Contra Kesner v. Consumers Co., 255 Ill.App. 216, 228-229 (1929) (storage of flammables constituting a nuisance); Bruckner v. Helfaer, 197 Wis. 582, 585, 222 N.W. 790 (1929) (residential tenant not liable for rent where landlord, with ample notice, does not control another tenant’s conduct).
Minjak Co. v. Randolph,
528 N.Y.S.2d 554 (App. Div. 1988).
H. Shapiro, New York City, for petitioner-landlord-respondent.
D. Ratner, New York City, for respondents-tenants-appellants.
Before Sandler, J.P., and Carro, Asch and Ellerin, JJ.
Order of the Appellate Term, First Department (Sandifer, Parness, Ostrau, JJ.), entered March 3, 1987, which reversed a final judgment of Civil Court (David Saxe, J.), entered March 23, 1984, awarding rent abatements, punitive damages and attorney’s fees to respondents-tenants-appellants, and ordered a new trial, is unanimously reversed, on the law, without costs, and the judgment of Civil Court reinstated except to eliminate any rent abatement for the period of time July through mid October 1981.
In July of 1983 petitioner-landlord commenced the within summary non-payment proceeding against respondents Randolph and Kikuchi, tenants of a loft space on the fourth floor of petitioner’s building on West 20th Street in Manhattan, alleging non-payment of rent since July 1981. The tenants’ answer set forth as affirmative defenses that because they were unable to use two-thirds of the loft space due to the landlord’s renovations and other conditions, they were entitled to an abatement of two-thirds of the rent, and that as to the remaining one-third space, they were entitled to a further rent abatement due to the landlord’s failure to supply essential services. The tenants also counterclaimed for breach of warranty of habitability, seeking both actual and punitive damages and attorney’s fees.
A trial was held in Civil Court before Justice Saxe in November of 1983. It was stipulated that rent was due and owing from October 1981 through November 1983 in the amount of $12,787 ($200 due for October 1981, $450 due each month from November 1981 through December 1982, and $567 per month since January 1983).
Respondents commenced residency of the loft space in 1976 pursuant to a commercial lease. Petitioner offered a commercial lease even though at the time of the signing of the lease the building was used predominantly for residential purposes and the respondents had informed petitioner that they would use the loft as their residence. The loft space measures 1700 square feet, approximately two-thirds of which is used as a music studio for Mr. Kikuchi, where he composes, rehearses and stores his very expensive electronic equipment and musical instruments. The remainder of the space is used as the tenants’ residence.
Late in 1977, the fifth floor tenant began to operate a health spa equipment business which included the display of fully working jacuzzis, bathtubs, and saunas. The jacuzzis and bathtubs were filled to capacity with water. From November 1977 through February 1982, respondents suffered at least 40 separate water leaks from the fifth floor. At times the water literally poured into the bedroom and bedroom closets of respondents’ loft, ruining their clothes and other items. Water leaked as well into the kitchen, the bathroom and onto Mr. Kikuchi’s grand piano and other musical instruments. Respondents’ complaints to petitioner went unheeded.
In January of 1978 the fifth-floor tenant began to sandblast the walls, causing sand to seep through openings around pipes and cracks in the ceiling and into respondent’s loft. The sand, which continued to fall into the loft even as the parties went to trial, got into respondent’s clothes, bed, food and even their eyes.
In September of 1981 the landlord commenced construction work in the building to convert the building into a Class A multiple building. To convert the freight elevator into a passenger elevator, petitioner had the elevator shaft on respondent’s side of the building removed. The workers threw debris down the elevator shaft, raising “huge clouds of dust” which came pouring into the loft and settled everywhere, on respondents’ clothes, bed, food, toothbrushes and musical equipment. The musical equipment had to be covered at all times to protect it from the dust. Respondents began to suffer from eye and sinus problems, nausea, and soreness in their throats from the inhalation of the dust. Respondents attempted to shield themselves somewhat from the dust by putting up plastic sheets, only to have the workmen rip them down.
To demonstrate the hazardous nature of some of the construction work, respondents introduced evidence that as the landlord’s workers were demolishing the stairs from the seventh floor down, no warning signs were posted, causing one visitor to come perilously close to falling through a hole in the stairs. The workers jackhammered a new entrance to the loft, permitting the debris to fall directly onto the floor of respondents’ loft. The workmen would mix cement right on respondents’ floor. A new entrance door to the loft was sloppily installed without a door sill, and loose bricks were left around the frame. A day later, brick fragments and concrete fell on tenant Randolph’s head as she closed the door.
The record contains many more examples of dangerous construction and other conduct interfering with respondents’ ability to use and enjoy possession of their loft. From 1981 until the time of trial, Kikuchi was completely unable to use the music studio portion of the loft. His musical instruments had been kept covered and protected against the sand and later the dust since 1978.
The jury rendered a verdict awarding respondents a rent abatement of 80% for July 1981 through November 1983, as compensatory damages on the theory of constructive eviction from the music studio portion of the loft; a 40% rent abatement for January 1981 through November 1983, on the remainder of the rent due for the residential portion of the premises, on a theory of breach of warranty of habitability; a 10% rent abatement on the rent attributable to the residential portion of the premises for all of 1979, on a breach of warranty of habitability theory; and punitive damages in the amount of $20,000. After trial the court granted respondents’ motion made pursuant to Real Property Law Sec. 234 for reasonable attorney’s fees, awarding respondents $5000. The court also granted petitioner’s motion to set aside the verdict and for other relief, only to the extent of reducing the award for punitive damages to $5000. Final judgment was entered on March 23, 1984.
On appeal to the Appellate Term that court reversed the judgment. Holding that the doctrine of constructive eviction could not provide a defense to this non-payment proceeding, because tenants had not abandoned possession of the demised premises, the court reversed the jury’s award as to the 80% rent abatement predicated on the constructive eviction theory. The court ordered a new trial on the counterclaim for breach of warranty of habitability, concluding it likely that the jury’s consideration of the constructive eviction claim impacted on the breach of warranty of habitability claim. The court also struck down the award of punitive damages, concluding that, even if punitive damages could properly be awarded in habitability cases, the facts herein did not support a finding of “high moral culpability” or “criminal indifference to civil obligations,” as required by Walker v. Sheldon, 10 N.Y.2d 401, 405, 223 N.Y.S.2d 488, 179 N.E.2d 497, so as to warrant punitive damages. We reverse and hold that the tenants were entitled to avail themselves of the doctrine of constructive eviction based on their abandonment of a portion of the premises and that the award for punitive damages was permissible and warranted by these facts.
We agree with the holding and reasoning of East Haven Associates v. Gurian, 64 Misc.2d 276,313 N.Y.S.2d 276, that a tenant may assert as a defense to the nonpayment of rent the doctrine of constructive eviction, even if he or she has abandoned only a portion of the demised premises due to the landlord’s acts in making that portion of the premises unusable by the tenant. The rule of Edgerton v. Page, 20 N.Y. 281, the first decision to establish the requirement of abandonment of premises as a condition to asserting the defense of constructive eviction, is not undermined by our acknowledgement of a defense for partial constructive eviction. Edgerton v. Page, supra, emphasized that the tenant’s obligation to pay rent continues as long as “the tenant remains in possession of the entire premises demised….” Id. at 285 [emphasis original]. It is not contrary to this rule nor against any established precedent to hold that when the tenant is constructively evicted from a portion of the premises by the landlord’s actions, he should not be obligated to pay the full amount of the rent. East Haven Associates v. Gurian, supra, 64 Misc.2d at 279-280,313 N.Y.S.2d 276. Indeed “compelling considerations of social policy and fairness” dictate such a result. Id. at 277, 313 N.Y.S.2d 276. None of the cases cited by the landlord reaches or warrants a contrary conclusion. See Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77, 83, 308 N.Y.S.2d 649, 256 N.E.2d 707; Two Rector Street Corp. v. Bein, 226 A.D. 73, 76, 234 N.Y.S. 409; 300 West 56th Street Corp. v. Kelly, 153 N.Y.S.2d 978.
As for petitioner’s argument on appeal that the tenants never abandoned any portion of the premises and, in fact, continued to use the entire loft even up until the day of trial, we note that this assertion is unaccompanied by any citation to the record. This was no mere inadvertent error, for there is absolutely nothing in the record to support such a claim. The evidence at trial fully supported a finding that respondents were compelled to abandon the music studio portion of the loft due to “the landlord’s wrongful acts [which] substantially and materially deprive[d] the tenant[s] of the beneficial use and enjoyment” of that portion of the loft. See Barash v. Pennsylvania Terminal Real Estate Corp., supra, 26 N.Y.2d at 83, 308 N.Y.S.2d 649, 256 N.E.2d 707.
Petitioner does, however, correctly point out that as the constructive eviction claim was asserted as a defense to the nonpayment of rent and respondents did not request an abatement for any months other than those in which they did not pay rent, the jury’s award of an 80% rent abatement as to the months July, August, September and half of October of 1981 must be stricken.
The award for punitive damages, as reduced by the Civil Court to $5000, should be reinstated as well. Although no exception to the court’s charge permitting the jury to award punitive damages was made, we discuss the issue of the propriety of submitting this issue to the jury in light of petitioner’s argument that the award subjects it to a liability for which there is no support in the law and in light of Appellate Term’s inconclusive comment on whether or not punitive damages could, as a matter of law, be awarded in habitability cases.
Although generally in breach of contract claims the damages to be awarded are compensatory, in certain instances punitive damages may be awarded when to do so would “deter morally culpable conduct.” See Halpin v. Prudential Ins. Co., 48 N.Y.2d 906, 907, 425 N.Y.S.2d 48, 401 N.E.2d 171; Williamson, Picket, Gross v. Hirschfeld, 92 A.D.2d 289, 295, 460 N.Y.S.2d 36 (punitive damages for conduct involving bad faith). The determining factor is “not the form of the action …, but the moral culpability of the defendant,” and whether the conduct implies a “criminal indifference to civil obligations.” Walker v. Sheldon, supra, 10 N.Y.2d at 404-405, 223 N.Y.S.2d 488, 179 N.E.2d 497.
With respect to this State’s strict housing code standards and statutes, made enforceable through civil and criminal sanctions and other statutory remedies, it is within the public interest to deter conduct which undermines those standards when that conduct rises to the level of high moral culpability or indifference to a landlord’s civil obligations. Therefore, it has been recognized that punitive damages may be awarded in breach of warranty of habitability cases where the landlord’s actions or inactions were intentional and malicious. See e.g., Pleasant East Associates v. Cabrera, 125 Misc.2d 877, 883-884, 480 N.Y.S.2d 693; Century Apts. Inc. v. Yalkowsky, 106 Misc.2d 762, 766, 435 N.Y.S.2d 627; Davis v. Williams, 92 Misc.2d 1051, 1054-1055, 402 N.Y.S.2d 92; Kipsborough Realty Corp. v. Goldbetter, 81 Misc.2d 1054, 1058-1060, 367 N.Y.S.2d 916.
Accordingly, the issue of punitive damages was properly submitted to the jury, and we are satisfied that this record supports the jury’s finding of morally culpable conduct in light of the dangerous and offensive manner in which the landlord permitted the construction work to be performed, the landlord’s indifference to the health and safety of others, and its disregard for the rights of others, so as to imply even a criminal indifference to civil obligations. See Walker v. Sheldon, supra, 10 N.Y.2d at 405, 223 N.Y.S.2d 488, 179 N.E.2d 497. One particularly egregious example of the landlord’s wanton disregard for the safety of others was the way in which the stair demolition was performed: steps were removed and no warning sign even posted. The landlord’s indifference and lack of response to the tenants’ repeated complaints of dust, sand and water leak problems demonstrated a complete indifference to their health and safety and a lack of concern for the damage these conditions could cause to the tenants’ valuable personal property. Such indifference must be viewed as rising to the level of high moral culpability. Accordingly, the award of punitive damages is sustained.
We likewise reject petitioner’s argument that respondents cannot rely on their lease in order to recover attorney’s fees pursuant to the provisions of Real Property Law Sec. 234. This statute has the effect, inter alia, of implying into a lease for residential property which contains a provision permitting the landlord to recover attorney’s fees in a summary proceeding brought pursuant to the lease a similarly binding covenant by the landlord to pay the tenant’s reasonable attorney’s fees incurred in the successful defense of a summary proceeding commenced by the landlord arising out of the lease. We find totally without merit petitioner’s interpretation of the decision of another Civil Court judge, holding that the landlord could not take advantage of the waiver of jury trial lease provision, as meaning that respondents cannot now rely on the lease at all in seeking an award of attorney’s fees. This is an action under the lease and this lease has not been voided. Furthermore, residential occupants of lofts are afforded the same protections available to other residential tenants under the Real Property Law (seeMultiple Dwelling Law Sec. 286 ). Thus, the award for attorney’s fees was proper.
Except to eliminate any rent abatement for July through mid-October of 1981, the Civil Court judgment should be reinstated.
Overstreet v. Rhodes,
212 Ga. 521 (1956)
Wm. G. Grant, Robert W. Spears, for plaintiff in error.
T. Charles Allen, Fisher, Phillips & Allen, contra.
(After stating the foregoing facts.) As shown by our statement of the case, the defendant admitted a prima facie case in the plaintiff’s favor, and affirmatively pleaded constructive eviction from the rented building resulting from the landlord’s failure to keep it in a proper state of repair as it was his duty to do under the rent contract. A rented building becomes untenantable and the tenant is constructively evicted therefrom and thereafter relieved of his obligation to pay rent, when the landlord whose duty it is to keep it in a proper state of repair allows it to deteriorate to such an extent that it is an unfit place for the tenant to carry on the business for which it was rented, and when it cannot be restored to a fit condition by ordinary repairs which can be made without unreasonable interruption of the tenant’s business. Wolff v. Turner, 6 Ga. App. 366 (65 S. E. 41); Weinstein v. Schacter Brothers, 32 Ga. App. 742 (124 S. E. 803); Millen Hotel Co. v. Gray, 67 Ga. App. 38 (19 S. E. 2d 428). See also Lewis & Co. v. Chisolm, 68 Ga. 40. To establish its affirmative defense of constructive eviction from the rented premises, it was therefore necessary for the defendant in this case to prove (1) that the landlord in consequence of his failure to keep the rented building repaired allowed it to deteriorate to such an extent that it had become an unfit place for the defendant to carry on the business for which it was rented, and (2) that it could not be restored to a fit condition by ordinary repairs which could be made without unreasonable interruption of the tenant’s business. Whether or not the defendant had carried the burden and proved these essentials of his affirmative plea, was a question raised in the trial court both by the general grounds of the plaintiff’s motion for new trial and by his motion for judgment notwithstanding the verdict, and the Court of Appeals erred in holding that the evidence question as to whether or not the rented premises could be restored to a tenantable condition without unreasonable interruption to the tenant’s business was one which it could not consider, since it had been raised for the first time in the brief of the plaintiff in error.
Judgment reversed. All the Justices concur.
Javins v. First National Realty Corporation,
428 F.2d 1071 (1970)
Mr. Edmund E. Fleming, Boston, Mass., for appellants.
Mr. Herman Miller, Washington, D. C., for appellee.
Mrs. Caryl S. Terry, Washington, D. C., filed a brief on behalf of Washington Planning and Housing Association as amicus curiae urging reversal.
Mrs. Margaret F. Ewing, Mrs. Florence Wagman Roisman and Mrs. Patricia M. Wald, Washington, D. C., filed a brief on behalf of Neighborhood Legal Services Program as amicus curiae urging reversal.
Messrs. Myron Moskovitz and Peter Honigsberg filed a brief on behalf of National Housing Law Project as amicus curiae urging reversal.
Before Wright, McGowan and Robb, Circuit Judges.
J. Skelly Wright, Circuit Judge:
These cases present the question whether housing code1 violations which arise during the term of a lease have any effect upon the tenant’s obligation to pay rent. The Landlord and Tenant Branch of the District of Columbia Court of General Sessions ruled proof of such violations inadmissible when proffered as a defense to an eviction action for nonpayment of rent. The District of Columbia Court of Appeals upheld this ruling. Saunders v. First National Realty Corp., 245 A.2d 836 (1968).
Because of the importance of the question presented, we granted appeallants’ petitions for leave to appeal. We now reverse and hold that a warranty of habitability, measured by the standards set out in the Housing Regulations for the District of Columbia, is implied by operation of law into leases of urban dwelling units covered by those Regulations and that breach of this warranty gives rise to the usual remedies for breach of contract.
The facts revealed by the record are simple. By separate written leases,2 each of the appellants rented an apartment in a three-building apartment complex in Northwest Washington known as Clifton Terrace. The landlord, First National Realty Corporation, filed separate actions in the Landlord and Tenant Branch of the Court of General Sessions on April 8, 1966, seeking possession on the ground that each of the appellants had defaulted in the payment of rent due for the month of April. The tenants, appellants here, admitted that they had not paid the landlord any rent for April. However, they alleged numerous violations of the Housing Regulations as “an equitable defense or [a] claim by way of recoupment or set-off in an amount equal to the rent claim,” as provided in the rules of the Court of General Sessions.3 They offered to prove
“[t]hat there are approximately 1500 violations of the Housing Regulations of the District of Columbia in the building at Clifton Terrace, where Defendant resides some affecting the premises of this Defendant directly, others indirectly, and all tending to establish a course of conduct of violation of the Housing Regulations to the damage of Defendants * * *.”
Settled Statement of Proceedings and Evidence, p. 2 (1966). Appellants conceded at trial, however, that this offer of proof reached only violations which had arisen since the term of the lease had commenced. The Court of General Sessions refused appellants’ offer of proof4 and entered judgment for the landlord. The District of Columbia Court of Appeals affirmed, rejecting the argument made by appellants that the landlord was under a contractual duty to maintain the premises in compliance with the Housing Regulations. Saunders v. First National Realty Corp., supra, 245 A.2d at 838.5
Since, in traditional analysis, a lease was the conveyance of an interest in land, courts have usually utilized the special rules governing real property transactions to resolve controversies involving leases. However, as the Supreme Court has noted in another context, “the body of private property law * * *, more than almost any other branch of law, has been shaped by distinctions whose validity is largely historical.”6 Courts have a duty to reappraise old doctrines in the light of the facts and values of contemporary life – particularly old common law doctrines which the courts themselves created and developed.7 As we have said before, “[T]he continued vitality of the common law * * * depends upon its ability to reflect contemporary community values and ethics.”8
The assumption of landlord-tenant law, derived from feudal property law, that a lease primarily conveyed to the tenant an interest in land may have been reasonable in a rural, agrarian society; it may continue to be reasonable in some leases involving farming or commercial land. In these cases, the value of the lease to the tenant is the land itself. But in the case of the modern apartment dweller, the value of the lease is that it gives him a place to live. The city dweller who seeks to lease an apartment on the third floor of a tenement has little interest in the land 30 or 40 feet below, or even in the bare right to possession within the four walls of his apartment. When American city dwellers, both rich and poor, seek “shelter” today, they seek a well known package of goods and services9 – a package which includes not merely walls and ceilings, but also adequate heat, light and ventilation, serviceable plumbing facilities, secure windows and doors, proper sanitation, and proper maintenance.
Professor Powell summarizes the present state of the law:
”* * * The complexities of city life, and the proliferated problems of modern society in general, have created new problems for lessors and lessees and these have been commonly handled by specific clauses inserted in leases. This growth in the number and detail of specific lease covenants has reintroduced into the law of estates for years a predominantly contractual ingredient. In practice, the law today concerning estates for years consists chiefly of rules determining the construction and effect of lease covenants. * * *”10
Ironically, however, the rules governing the construction and interpretation of “predominantly contractual” obligations in leases have too often remained rooted in old property law.
Some courts have realized that certain of the old rules of property law governing leases are inappropriate for today’s transactions. In order to reach results more in accord with the legitimate expectations of the parties and the standards of the community, courts have been gradually introducing more modern precepts of contract law in interpreting leases.11 Proceeding piecemeal has, however, led to confusion where “decisions are frequently conflicting, not because of a healthy disagreement on social policy, but because of the lingering impact of rules whose policies are long since dead.”12
In our judgment the trend toward treating leases as contracts is wise and well considered. Our holding in this case reflects a belief that leases of urban dwelling units should be interpreted and construed like any other contract.13
Modern contract law has recognized that the buyer of goods and services in an industrialized society must rely upon the skill and honesty of the supplier to assure that goods and services purchased are of adequate quality.14 In interpreting most contracts, courts have sought to protect the legitimate expectations of the buyer and have steadily widened the seller’s responsibility for the quality of goods and services through implied warranties of fitness and merchantability.15 Thus without any special agreement a merchant will be held to warrant that his goods are fit for the ordinary purposes for which such goods are used and that they are at least of reasonably average quality. Moreover, if the supplier has been notified that goods are required for a specific purpose, he will be held to warrant that any goods sold are fit for that purpose. These implied warranties have become widely accepted and well established features of the common law, supported by the overwhelming body of case law.16 Today most states as well as the District of Columbia17 have codified and enacted these warranties into statute, as to the sale of goods, in the Uniform Commercial Code.
Implied warranties of quality have not been limited to cases involving sales. The consumer renting a chattel, paying for services, or buying a combination of goods and services must rely upon the skill and honesty of the supplier to at least the same extent as a purchaser of goods. Courts have not hesitated to find implied warranties of fitness and merchantability in such situations.18 In most areas product liability law has moved far beyond “mere” implied warranties running between two parties in privity with each other.19
The rigid doctrines of real property law have tended to inhibit the application of implied warranties to transactions involving real estate.20 Now, however, courts have begun to hold sellers and developers of real property responsible for the quality of their product.21 For example, builders of new homes have recently been held liable to purchasers for improper construction on the ground that the builders had breached an implied warranty of fitness.22 In other cases courts have held builders of new homes liable for breach of an implied warranty that all local building regulations had been complied with.23 And following the developments in other areas, very recent decisions24 and commentary25 suggest the possible extension of liability to parties other than the immediate seller for improper construction of residential real estate.
Despite this trend in the sale of real estate, many courts have been unwilling to imply warranties of quality, specifically a warranty of habitability, into leases of apartments. Recent decisions have offered no convincing explanation for their refusal26 ; rather they have relied without discussion upon the old common law rule that the lessor is not obligated to repair unless he covenants to do so in the written lease contract.27 However, the Supreme Courts of at least two states, in recent and well reasoned opinions, have held landlords to implied warranties of quality in housing leases. Lemle v. Breeden, S.Ct.Hawaii, 462 P. 2d 470 (1969); Reste Realty Corp. v. Cooper, 53 N.J. 444, 251 A.2d 268 (1969). See also Pines v. Perssion, 14 Wis.2d 590, 111 N.W.2d 409 (1961). In our judgment, the old no-repair rule cannot coexist with the obligations imposed on the landlord by a typical modern housing code, and must be abandoned28 in favor of an implied warranty of habitability.29 In the District of Columbia, the standards of this warranty are set out in the Housing Regulations.
A. In our judgment the common law itself must recognize the landlord’s obligation to keep his premises in a habitable condition. This conclusion is compelled by three separate considerations. First, we believe that the old rule was based on certain factual assumptions which are no longer true; on its own terms, it can no longer be justified. Second, we believe that the consumer protection cases discussed above require that the old rule be abandoned in order to bring residential landlord-tenant law into harmony with the principles on which those cases rest. Third, we think that the nature of today’s urban housing market also dictates abandonment of the old rule.
The common law rule absolving the lessor of all obligation to repair originated in the early Middle Ages.30 Such a rule was perhaps well suited to an agrarian economy; the land was more important31 than whatever small living structure was included in the leasehold, and the tenant farmer was fully capable of making repairs himself.32 These historical facts were the basis on which the common law constructed its rule; they also provided the necessary prerequisites for its application.33
Court decisions in the late 1800’s began to recognize that the factual assumptions of the common law were no longer accurate in some cases. For example, the common law, since it assumed that the land was the most important part of the leasehold, required a tenant to pay rent even if any building on the land was destroyed.34 Faced with such a rule and the ludicrous results it produced, in 1863 the New York Court of Appeals declined to hold that an upper story tenant was obliged to continue paying rent after his apartment building burned down.35 The court simply pointed out that the urban tenant had no interest in the land, only in the attached building.
Another line of cases created an exception to the no-repair rule for short term leases of furnished dwellings.36 The Massachusetts Supreme Judicial Court, a court not known for its willingness to depart from the common law, supported this exception, pointing out:
”* * * [A] different rule should apply to one who hires a furnished room, or a furnished house, for a few days, or a few weeks or months. Its fitness for immediate use of a particular kind, as indicated by its appointments, is a far more important element entering into the contract than when there is a mere lease of real estate. One who lets for a short term a house provided with all furnishings and appointments for immediate residence may be supposed to contract in reference to a well-understood purpose of the hirer to use it as a habitation. * * * It would be unreasonable to hold, under such circumstances, that the landlord does not impliedly agree that what he is letting is a house suitable for occupation in its condition at the time. * * *”37
These as well as other similar cases38 demonstrate that some courts began some time ago to question the common law’s assumptions that the land was the most important feature of a leasehold and that the tenant could feasibly make any necessary repairs himself. Where those assumptions no longer reflect contemporary housing patterns, the courts have created exceptions to the general rule that landlords have no duty to keep their premises in repair.
It is overdue for courts to admit that these assumptions are no longer true with regard to all urban housing. Today’s urban39 tenants, the vast majority of whom live in multiple dwelling houses, are interested, not in the land, but solely in “a house suitable for occupation.” Furthermore, today’s city dweller usually has a single, specialized skill unrelated to maintenance work; he is unable to make repairs like the “jack-of-all-trades” farmer who was the common law’s model of the lessee.40 Further, unlike his agrarian predecessor who often remained on one piece of land for his entire life, urban tenants today are more mobile than ever before. A tenant’s tenure in a specific apartment will often not be sufficient to justify efforts at repairs. In addition, the increasing complexity of today’s dwellings renders them much more difficult to repair than the structures of earlier times. In a multiple dwelling repair may require access to equipment and areas in the control of the landlord. Low and middle income tenants, even if they were interested in making repairs, would be unable to obtain any financing for major repairs since they have no long-term interest in the property.
Our approach to the common law of landlord and tenant ought to be aided by principles derived from the consumer protection cases referred to above.41 In a lease contract, a tenant seeks to purchase from his landlord shelter for a specified period of time. The landlord sells housing as a commercial businessman and has much greater opportunity, incentive and capacity to inspect and maintain the condition of his building. Moreover, the tenant must rely upon the skill and bona fides of his landlord at least as much as a car buyer must rely upon the car manufacturer. In dealing with major problems, such as heating, plumbing, electrical or structural defects, the tenant’s position corresponds precisely with “the ordinary consumer who cannot be expected to have the knowledge or capacity or even the opportunity to make adequate inspection of mechanical instrumentalities, like automobiles, and to decide for himself whether they are reasonably fit for the designed purpose.” Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 375, 161 A.2d 69, 78 (1960).42
Since a lease contract specifies a particular period of time during which the tenant has a right to use his apartment for shelter, he may legitimately expect that the apartment will be fit for habitation for the time period for which it is rented. We point out that in the present cases there is no allegation that appellants’ apartments were in poor condition or in violation of the housing code at the commencement of the leases.43 Since the lessees continue to pay the same rent, they were entitled to expect that the landlord would continue to keep the premises in their beginning condition during the lease term. It is precisely such expectations that the law now recognizes as deserving of formal, legal protection.
Even beyond the rationale of traditional products liability law, the relationship of landlord and tenant suggests further compelling reasons for the law’s protection of the tenants’ legitimate expectations of quality. The inequality in bargaining power between landlord and tenant has been well documented.44 Tenants have very little leverage to enforce demands for better housing. Various impediments to competition in the rental housing market, such as racial and class discrimination45 and standardized form leases,46 mean that landlords place tenants in a take it or leave it situation. The increasingly severe shortage47 of adequate housing further increases the landlord’s bargaining power and escalates the need for maintaining and improving the existing stock. Finally, the findings by various studies of the social impact of bad housing has led to the realization that poor housing is detrimental to the whole society, not merely to the unlucky ones who must suffer the daily indignity of living in a slum.48
Thus we are led by our inspection of the relevant legal principles and precedents to the conclusion that the old common law rule imposing an obligation upon the lessee to repair during the lease term was really never intended to apply to residential urban leaseholds. Contract principles established in other areas of the law provide a more rational framework for the apportionment of landlord-tenant responsibilities; they strongly suggest that a warranty of habitability be implied into all contracts49 for urban dwellings.
B. We believe, in any event, that the District’s housing code requires that a warranty of habitability be implied in the leases of all housing that it covers. The housing code – formally designated the Housing Regulations of the District of Columbia – was established and authorized by the Commissioners of the District of Columbia on August 11, 1955.50 Since that time, the code has been updated by numerous orders of the Commissioners. The 75 pages of the Regulations provide a comprehensive regulatory scheme setting forth in some detail: (a) the standards which housing in the District of Columbia must meet;51 (b) which party, the lessor or the lessee, must meet each standard; and (c) a system of inspections, notifications and criminal penalties. The Regulations themselves are silent on the question of private remedies.
Two previous decisions of this court, however, have held that the Housing Regulations create legal rights and duties enforceable in tort by private parties. In Whetzel v. Jess Fisher Management Co., 108 U.S.App.D.C. 385, 282 F.2d 943 (1960), we followed the leading case of Altz v. Lieberson, 233 N.Y. 16, 134 N.E. 703 (1922), in holding (1) that the housing code altered the common law rule and imposed a duty to repair upon the landlord, and (2) that a right of action accrued to a tenant injured by the landlord’s breach of this duty. As Judge Cardozo wrote in Lieberson:
”* * * We may be sure that the framers of this statute, when regulating tenement life, had uppermost in thought the care of those who are unable to care for themselves. The Legislature must have known that unless repairs in the rooms of the poor were made by the landlord, they would not be made by any one. The duty imposed became commensurate with the need. The right to seek redress is not limited to the city or its officers. The right extends to all whom there was a purpose to protect. * * *”
134 N.E. at 704. Recently, in Kanelos v. Kettler, 132 U.S.App.D.C. 133, 135, 406 F.2d 951, 953 (1968), we reaffirmed our position in Whetzel, holding that “the Housing Regulations did impose maintenance obligations upon appellee [landlord] which he was not free to ignore.”52
The District of Columbia Court of Appeals gave further effect to the Housing Regulations in Brown v. Southall Realty Co., 237 A.2d 834 (1968). There the landlord knew at the time the lease was signed that housing code violations existed which rendered the apartment “unsafe and unsanitary.” Viewing the lease as a contract, the District of Columbia Court of Appeals held that the premises were let in violation of Sections 230453 and 250154 of the Regulations and that the lease, therefore, was void as an illegal contract. In the light of Brown, it is clear not only that the housing code creates privately enforceable duties as held in Whetzel, but that the basic validity of every housing contract depends upon substantial compliance with the housing code at the beginning of the lease term. The Brown court relied particularly upon Section 2501 of the Regulations which provides:
“Every premises accommodating one or more habitations shall be maintained and kept in repair so as to provide decent living accommodations for the occupants. This part of this Code contemplates more than mere basic repairs and maintenance to keep out the elements; its purpose is to include repairs and maintenance designed to make a premises or neighborhood healthy and safe.”
By its terms, this section applies to maintenance and repair during the lease term. Under the Brown holding, serious failure to comply with this section before the lease term begins renders the contract void. We think it untenable to find that this section has no effect on the contract after it has been signed. To the contrary, by signing the lease the landlord has undertaken a continuing obligation to the tenant to maintain the premises in accordance with all applicable law.
This principle of implied warranty is well established. Courts often imply relevant law into contracts to provide a remedy for any damage caused by one party’s illegal conduct.55 In a case closely analogous to the present ones, the Illinois Supreme Court held that a builder who constructed a house in violation of the Chicago building code had breached his contract with the buyer:
”* * * [T]he law existing at the time and place of the making of the contract is deemed a part of the contract, as though expressly referred to or incorporated in it. * * *
“The rationale for this rule is that the parties to the contract would have expressed that which the law implies ‘had they not supposed that it was unnecessary to speak of it because the law provided for it.’ * * * Consequently, the courts, in construing the existing law as part of the express contract, are not reading into the contract provisions different from those expressed and intended by the parties, as defendants contend, but are merely construing the contract in accordance with the intent of the parties.”56
We follow the Illinois court in holding that the housing code must be read into housing contracts – a holding also required by the purposes and the structure of the code itself.57 The duties imposed by the Housing Regulations may not be waived or shifted by agreement if the Regulations specifically place the duty upon the lessor.58 Criminal penalties are provided if these duties are ignored. This regulatory structure was established by the Commissioners because, in their judgment, the grave conditions in the housing market required serious action. Yet official enforcement of the housing code has been far from uniformly effective.59 Innumerable studies have documented the desperate condition of rental housing in the District of Columbia and in the nation. In view of these circumstances, we think the conclusion reached by the Supreme Court of Wisconsin as to the effect of a housing code on the old common law rule cannot be avoided:
”* * * [T]he legislature has made a policy judgment – that it is socially (and politically) desirable to impose these duties on a property owner – which has rendered the old common law rule obsolete. To follow the old rule of no implied warranty of habitability in leases would, in our opinion, be inconsistent with the current legislative policy concerning housing standards. * * *”60
We therefore hold that the Housing Regulations imply a warranty of habitability, measured by the standards which they set out, into leases of all housing that they cover.
In the present cases, the landlord sued for possession for nonpayment of rent. Under contract principles,61 however, the tenant’s obligation to pay rent is dependent upon the landlord’s performance of his obligations, including his warranty to maintain the premises in habitable condition. In order to determine whether any rent is owed to the landlord, the tenants must be given an opportunity to prove the housing code violations alleged as breach of the landlord’s warranty.62
At trial, the finder of fact must make two findings: (1) whether the alleged violations63 existed during the period for which past due rent is claimed, and (2) what portion, if any or all, of the tenant’s obligation to pay rent was suspended by the landlord’s breach. If no part of the tenant’s rental obligation is found to have been suspended, then a judgment for possession may issue forthwith. On the other hand, if the jury determines that the entire rental obligation has been extinguished by the landlord’s total breach, then the action for possession on the ground of nonpayment must fail.64
The jury may find that part of the tenant’s rental obligation has been suspended but that part of the unpaid back rent is indeed owed to the landlord.65 In these circumstances, no judgment for possession should issue if the tenant agrees to pay the partial rent found to be due.66 If the tenant refuses to pay the partial amount, a judgment for possession may then be entered.
The judgment of the District of Columbia Court of Appeals is reversed and the cases are remanded for further proceedings consistent with this opinion.67
Circuit Judge Robb concurs in the result and in Parts IV-B and V of the opinion.
- Housing Regulations of the District of Columbia (1956).
- A clause in the lease provided that the tenant waived the statutory 30-day notice to quit. 45 D.C.Code § 908 (1967) expressly permits waiver of this notice. Appellants’ answer put in issue the validity of the waivers. In view of our disposition, we have no occasion to pass upon this aspect of the case.
- Rule 4(c) of the Landlord and Tenant Branch of the Court of General Sessions provides:
“In suits in this branch for recovery of possession of property in which the basis of recovery of possession is nonpayment of rent, tenants may set up an equitable defense or claim by way of recoupment or set-off in an amount equal to the rent claim. No counterclaim may be filed unless plaintiff asks for money judgment for rent. The exclusion of prosecution of any claims in this branch shall be without prejudice to the prosecution of any claims in other branches of the court.”
Appellants have sought only to defeat the landlord’s action; they have not as yet claimed any money damages for the landlord’s alleged breach of contract. Under Rule 4(c) supra, they may not counterclaim for money damages if the landlord seeks only possession and no money judgment, as it has done here. For the considerations to be applied in determining whether this rule conforms “as nearly as may be practicable” to the Federal Rules of Civil Procedure as required by 13 D.C.Code § 101 (1967), see McKelton v. Bruno, 138 U.S.App. D.C. –, 428 F.2d 718 (decided February 17, 1970).
- According to established procedure, this case was submitted to both the District of Columbia Court of Appeals and this court on the basis of a sparse “Settled Statement of Proceedings and Evidence,” as approved by both parties and the trial judge. Unfortunately, the court’s ruling on the offer of proof was made from the bench, and the basis of the ruling is not reflected in the “Settled Statement.” We have recently noted the inadequacy of such records for review by an appellate court. Lee v. Habib, 137 U.S.App.D.C. 403, 424 F.2d 891 (1970).
- In the District of Columbia Court of Appeals, appellee urged that these cases were moot on the basis of events occurring since the landlord initiated this litigation. The D.C. Court of Appeals held that the cases were not moot. Saunders v. First National Realty Co., 245 A.2d 836, 837 (1968). Appellee has not argued mootness here, and in any event we follow the ruling of the D.C. Court of Appeals on this point.
- Jones v. United States, 362 U.S. 257, 266, 80 S.Ct. 725, 733, 4 L.Ed.2d 697 (1960).
- See Spencer v. General Hospital of the District of Columbia, 138 U.S.App.D.C. 48, 53, 425 F.2d 479, 484 (1969) (en banc); Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 90, 207 A.2d 314, 325 (1965). Cf. 11 S. Williston, Contracts § 1393A at 461 (3d ed. W. Jaeger 1968) (“Most of the leading jurisdictions have not hesitated to undo a judicially committed blunder * * * by employing the same means – judicial decisions”) and cases cited therein at n. 20.
- Whetzel v. Jess Fisher Management Co., 108 U.S.App.D.C. 385, 388, 282 F.2d 943, 946 (1960).
- See, e. g., National Commission on Urban Problems, Building the American City 9 (1968). The extensive standards set out in the Housing Regulations provide a good guide to community expectations.
- 2 R. Powell, Real Property ¶ 221  at 179 (1967).
- E. g., Medico-Dental Building Co. v. Horton & Converse, 21 Cal.2d 411, 418, 132 P.2d 457, 462 (1942). See also 1 American Law of Property § 3.11 at 202-205 (A. Casner ed. 1952); Note, The California Lease – Contract or Conveyance?, 4 Stan.L.Rev. 244 (1952); Friedman, The Nature of a Lease in New York, 33 Cornell L.Q. 165 (1947).
- Kessler, The Protection of the Consumer Under Modern Sales Law, 74 Yale L.J. 262, 263 (1964).
- This approach does not deny the possible importance of the fact that land is involved in a transaction. The interpretation and construction of contracts between private parties has always required courts to be sensitive and responsive to myriad different factors. We believe contract doctrines allow courts to be properly sensitive to all relevant factors in interpreting lease obligations.
We also intend no alteration of statutory or case law definitions of the term “real property” for purposes of statutes or decisions on recordation, descent, conveyancing, creditors’ rights, etc. We contemplate only that contract law is to determine the rights and obligations of the parties to the lease agreement, as between themselves. The civil law has always viewed the lease as a contract, and in our judgment that perspective has proved superior to that of the common law. See 2 M. Planiol, Treatise on the Civil Law § 1663 et seq. (1959); 11 La.Stat.Ann., Civil Code, Art. 2669 (1952).
- See generally 8 S. Williston, Contracts §§ 983-989 (3d ed. W. Jaeger 1964); W. Prosser, Torts § 95 (3d ed. 1964).
- See Jaeger, Warranties of Merchantability and Fitness for Use, 16 Rutgers L. Rev. 493 (1962); Uniform Commercial Code §§ 2-314, 2-315 (1968).
- 28 D.C.Code Subtitle I (1967).
- Farnsworth, Implied Warranties of Quality in Non-Sales Cases, 57 Colum. L.Rev. 653 (1957). See Cintrone v. Hertz Truck Leasing & Rental Service, 45 N.J. 434, 212 A.2d 769 (1965); 2 F. Harper & F. James, Torts § 28.19 at 1577 n. 5 and n. 6 (1956).
- See, e. g., Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960); Goldberg v. Kollsman Instrument Corp., 12 N.Y.2d 432, 240 N.Y.S.2d 592, 191 N.E.2d 81 (1963). See generally Prosser, The Assault Upon the Citadel (Strict Liability to the Consumer), 69 Yale L.J. 1099 (1960); Jaeger, Product Liability: The Constructive Warranty, 39 Notre Dame Lawyer 501 (1964).
- See Fegeas v. Sherill, 218 Md. 472, 147 A.2d 223 (1958); 7 S. Williston, Contracts § 926 at 800-801, § 926A (3d ed. W. Jaeger 1963).
- See generally Bearman, Caveat Emptor in Sale of Realty – Recent Assaults Upon the Rule, 14 Vand.L.Rev. 541 (1961); Dunham, Vendor’s Obligation as to Fitness of Land for a Particular Purpose, 37 Minn.L.Rev. 108 (1953).
- See Waggoner v. Midwestern Development, Inc., S.D., 154 N.W.2d 803 (1967); Bethlahmy v. Bechtel, 91 Idaho 55, 415 P.2d 698 (1969); Schipper v. Levitt & Sons, Inc., supra Note 7; Carpenter v. Donohoe, 154 Colo. 78, 388 P.2d 399 (1964); Loraso v. Custom Built Homes, Inc., La.App., 144 So.2d 459 (1962). Other cases still continue the older limitation on the vendor’s liability to homes sold before construction is complete. See, e. g., Hoye v. Century Builders, 52 Wash.2d 830, 329 P.2d 474 (1958).
- See Schiro v. W. E. Gould & Co., 18 Ill.2d 538, 165 N.E.2d 286 (1960); Annot., 110 A.L.R. 1048 (1937).
- Connor v. Great Western Savings and Loan Ass’n, 69 Cal.2d 850, 73 Cal.Rptr. 369, 447 P.2d 609 (1968) (in bank) (Traynor, Ch. J.). Chief Justice Traynor’s excellent opinion utilizes tort doctrines to extend liability beyond the immediate seller.
- Comment, Liability of the Institutional Lender for Structural Defects in New Housing, 35 U.Chi.L.Rev. 739 (1968).
- E. g., Kearse v. Spaulding, 406 Pa. 140, 176 A.2d 450 (1962); Susskind v. 1136 Tenants Corp., 43 Misc.2d 588, 251 N.Y.S.2d 321 (1964); Rubinger v. Del Monte, N.Y.S.Ct., App.T., 217 N.Y.S.2d 792 (1961).
- The cases which recite this old rule are legion. A representative sampling is cited in 32 Am.Jur. Landlord and Tenant § 655 n. 14 (1941).
- As far as tort liability is concerned, we have previously held that the old common law rule has been changed by passage of the housing code and that the landlord has a duty to maintain reasonably safe premises. See Note 52 infra.
- Although the present cases involve written leases, we think there is no particular significance in this fact. The landlord’s warranty is implied in oral and written leases for all types of tenancies.
- The rule was “settled” by 1485. 3 W. Holdsworth, A History of English Law 122-123 (6th ed. 1934). The common law rule discussed in text originated in the even older rule prohibiting the tenant from committing waste. The writ of waste expanded as the tenant’s right to possession grew stronger. Eventually, in order to protect the landowner’s reversionary interest, the tenant became obligated to make repairs and liable to eviction and damages if he failed to do so. Ibid.
- The land was so central to the original common law conception of a leasehold that rent was viewed as “issuing” from the land: “[T]he governing idea is that the land is bound to pay the rent * *. We may almost go to the length of saying that the land pays it through [the tenant’s] hand.” 2 F. Pollock & F. Maitland, The History of English Law 131 (2d ed. 1923).
- Many later judicial opinions have added another justification of the old common law rule. They have invoked the timeworn cry of caveat emptor and argued that a lessee has the opportunity to inspect the premises. On the basis of his inspection, the tenant must then take the premises “as is,” according to this reasoning. As an historical matter, the opportunity to inspect was not thought important when the rule was first devised. See Note 30 supra. To the extent the no-repair rule rests on caveat emptor, see page 1079, infra.
- Even the old common law courts responded with a different rule for a landlord-tenant relationship which did not conform to the model of the usual agrarian lease. Much more substantial obligations were placed upon the keepers of inns (the only multiple dwelling houses known to the common law). Their guests were interested solely in shelter and could not be expected to make their own repairs. “The modern apartment dweller more closely resembles the guest in an inn than he resembles an agrarian tenant, but the law has not generally recognized the similarity.” J. Levi, P. Hablutzel, L. Rosenberg & J. White, Model Residential Landlord-Tenant Code 6-7 (Tent. Draft 1969).
- Paradine v. Jane, Aleyn 26, 82 Eng. Rep. 897 (K.B. 1947); 1 American Law of Property, supra Note 11, § 3.103.
- Graves v. Berdan, 26 N.Y. 498 (1863).
- 1 American Law of Property, supra Note 11, § 3.45 at 267-268, and cases cited therein.
- Ingalls v. Hobbs, 156 Mass. 348, 31 N.E. 286 (1892).
- The cases developing the doctrines of “quiet enjoyment” and “constructive eviction” are the most important. See 2 R. Powell, supra Note 10, ¶ 225 . See also Gladden v. Walker & Dunlop, 83 U.S.App.D.C. 224, 168 F.2d 321 (1948) (landlord has duty to maintain portions of apartment “under his control” including plumbing, heating and electrical systems); J. D. Young Corp. v. McClintic, Tex.Civ.App., 26 S.W.2d 460 (1930) (implied covenant of fitness in lease of building under construction); Steefel x. Rothschild, 179 N.Y. 273, 72 N.E. 112 (1904) (duty to disclose latent defects).
- In 1968 more than two thirds of America’s people lived in the 228 largest metropolitan areas. Only 5.2% lived on farms. The World Almanac 1970 at 251 (L. Long ed.). More than 98% of all housing starts in 1968 were non-farm. Id. at 313.
- See J. Levi et al., supra Note 33, at 6.
- See Part III, supra.
- Nor should the average tenant be thought capable of “inspecting” plaster, floorboards, roofing, kitchen appliances, etc. To the extent, however, that some defects are obvious, the law must take note of the present housing shortage. Tenants may have no real alternative but to accept such housing with the expectation that the landlord will make necessary repairs. Where this is so, caveat emptor must of necessity be rejected.
- In Brown v. Southall Realty Co., 237 A.2d 834 (1968), the District of Columbia Court of Appeals held that unsafe and unsanitary conditions existing at the beginning of the tenancy and known to the landlord rendered any lease of those premises illegal and void.
- See Edwards v. Habib, 130 U.S.App. D.C. 126, 140, 397 F.2d 687, 701 (1968); 2 R. Powell, supra Note 10, ¶ 221  at 183; President’s Committee on Urban Housing, A Decent Home 96 (1968).
- President’s Committee, supra Note 44, at 96; National Commission, supra Note 9, at 18-19; G. Sternlieb, The Tenement Landlord 71 (1966).
- R. Powell, supra Note 10, ¶ 221  at 183 n. 13.
- See generally President’s Committee, supra Note 44.
- A. Schorr, Slums and Insecurity (1963); J. Levi, et al., supra Note 33, at 7-8.
- We need not consider the provisions of the written lease governing repairs since this implied warranty of the landlord could not be excluded. See Henningsen v. Bloomfield Motors, Inc., supra Note 19; Kay v. Cain, 81 U.S.App.D.C. 24, 25, 154 F.2d 305, 306 (1946). See also Note 58, infra.
- 2 D.C.Register 47 (1955).
- These include standards for nursing homes and other similar institutions. The full scheme of the Regulations is set out in Whetzel v. Fisher Management Co., supra Note 8.
- Kanelos and Whetzel have effectively overruled, on the basis of the enactment of the housing code, Bowles v. Mahoney, 91 U.S.App.D.C. 155, 202 F.2d 320 (1952) (two to one decision, Judge Bazelon dissenting).
- “No person shall rent or offer to rent any habitation, or the furnishings thereof, unless such habitation and its furnishings are in a clean, safe and sanitary condition, in repair, and free from rodents or vermin.”
- See infra.
- See cases cited in Annot., 110 A.L.R. 1048 (1937).
- Schiro v. W. E. Gould & Co., supra Note 23, 18 Ill.2d at 544, 165 N.E.2d at 290. As a general proposition, it is undoubtedly true that parties to a contract intend that applicable law will be complied with by both sides. We recognize, however, that reading statutory provisions into private contracts may have little factual support in the intentions of the particular parties now before us. But, for reasons of public policy, warranties are often implied into contracts by operation of law in order to meet generally prevailing standards of honesty and fair dealing. When the public policy has been enacted into law like the housing code, that policy will usually have deep roots in the expectations and intentions of most people. See Costigan, Implied-in-Fact Contracts and Mutual Assent, 33 Harv. L.Rev. 376, 383-385 (1920).
- “The housing and sanitary codes, especially in light of Congress’ explicit direction for their enactment, indicate a strong and pervasive congressional concern to secure for the city’s slum dwellers decent, or at least safe and sanitary, places to live.” Edwards v. Habib, supra Note 44, 130 U.S.App.D.C. at 139, 397 F.2d at 700.
- Any private agreement to shift the duties would be illegal and unenforceable. The precedents dealing with industrial safety statutes are directly in point:
”* * * [T]he only question remaining is whether the courts will enforce or recognize as against a servant an agreement express or implied on his part to waive the performance of a statutory duty of the master imposed for the protection of the servant, and in the interest of the public, and enforceable by criminal prosecution. We do not think they will. To do so would be to nullify the object of the statute. * * *”
Narramore v. Cleveland, C., C. & St. L. Ry. Co., 6 Cir., 96 F. 298, 302 (1899). See W. Prosser, Torts § 67 at 468-469 (3d ed. 1964) and cases cited therein.
- See Gribetz & Grad, Housing Code Enforcement: Sanctions and Remedies, 66 Colum.L.Rev. 1254 (1966); Note, Enforcement of Municipal Housing Codes, 78 Harv.L.Rev. 801 (1965).
- Pines v. Perssion, 14 Wis.2d 590, 596, 111 N.W.2d 409, 412-413 (1961). Accord, Buckner v. Azulai, 251 Cal.App.2d Supp. 1013, 59 Cal.Rptr. 806 (1967).
- In extending all contract remedies for breach to the parties to a lease, we include an action for specific performance of the landlord’s implied warranty of habitability.
- To be relevant, of course, the violations must affect the tenant’s apartment or common areas which the tenant uses. Moreover, the contract principle that no one may benefit from his own wrong will allow the landlord to defend by proving the damage was caused by the tenant’s wrongful action. However, violations resulting from inadequate repairs or materials which disintegrate under normal use would not be assignable to the tenant. Also we agree with the District of Columbia Court of Appeals that the tenant’s private rights do not depend on official inspection or official finding of violation by the city government. Diamond Housing Corp. v. Robinson, 257 A.2d 492, 494 (1969).
- The jury should be instructed that one or two minor violations standing alone which do not affect habitability are de minimis and would not entitle the tenant to a reduction in rent.
- As soon as the landlord made the necessary repairs rent would again become due. Our holding, of course, affects only eviction for nonpayment of rent. The landlord is free to seek eviction at the termination of the lease or on any other legal ground.
- In George Y. Worthington & Son Management Corp. v. Levy, 204 A.2d 334, 336 (1964), the District of Columbia Court of Appeals approved a similar procedure:
“In actions for possession of real property by reason of default in rent, where no money judgment for the back rent is sought, it is nevertheless proper practice for the trial court to specifically find the amount of rent in arrears. * * *”
- Compare Molyneaux v. Town House, Inc., D.C.C.A., 195 A.2d 744 (1963). A jury finding that the landlord had failed to live up to all of his obligations would operate as a conclusive finding that the tenant was entitled to equitable relief under Molyneaux.
- Appellants in the present cases offered to pay rent into the registry of the court during the present action. We think this is an excellent protective procedure. If the tenant defends against an action for possession on the basis of breach of the landlord’s warranty of habitability, the trial court may require the tenant to make future rent payments into the registry of the court as they become due; such a procedure would be appropriate only while the tenant remains in possession. The escrowed money will, however, represent rent for the period between the time the landlord files suit and the time the case comes to trial. In the normal course of litigation, the only factual question at trial would be the condition of the apartment during the time the landlord alleged rent was due and not paid.
As a general rule, the escrowed money should be apportioned between the landlord and the tenant after trial on the basis of the finding of rent actually due for the period at issue in the suit. To insure fair apportionment, however, we think either party should be permitted to amend its complaint or answer at any time before trial, to allege a change in the condition of the apartment. In this event, the finder of fact should make a separate finding as to the condition of the apartment at the time at which the amendment was filed. This new finding will have no effect upon the original action; it will only affect the distribution of the escrowed rent paid after the filing of the amendment.
Thompson v. Crownover et al.,
259 Ga. 126 (1989)
Carr, Tabb & Pope, David H. Pope, for appellant.
Richard Eason, Jr., John C. Sumner, Rex T. Reeves, Morse & Ontal, Jack O. Morse, for appellees.
Dennis A. Goldstein, Kay Y. Young, amici curiae.
We granted a writ of certiorari in Thompson v. Crownover, 186 Ga. App. 633 (368 SE2d 170) (1988), and we reverse.
The appellant, Mrs. Thompson, was seriously burned when flames from what was left of a deteriorating gas heater ignited her clothing. She filed an action against the appellees, James L. Crownover and Crownover Electrical and Mechanical, Inc., the owners of the house in which the incident occurred.
The trial court granted the appellees’ motion for summary judgment after finding that the defective condition of the heater was patent and that the appellant had equal or superior knowledge of the defect. The Court of Appeals (three judges concurred in the opinion, two concurred in the judgment only, and four dissented) generally affirmed the trial court’s grant of summary judgment for the appellees.
Mrs. Howard, the appellant’s mother, leased three rooms from Mr. Crownover as a dwelling place where she lived with her two daughters and six grandchildren. Two gas heaters served as the source of heat for the rooms. At the time Mrs. Howard leased the rooms, the bedroom heater lacked the protective radiants that served as protection from the gas flames.
During the tenancy, Mrs. Howard told Mr. Crownover that the heater was dangerous and asked him to repair it. Mr. Crownover did not repair the heater, but he did authorize Mrs. Howard to repair it. He told her that she could buy the necessary protective radiants and deduct the cost from her rent. The protective radiants she purchased were not the proper size, and her attempt to repair the heater was unsuccessful. Subsequently, the top and back of the heater fell off, leaving open gas flames rising from a frame on the floor.
Mr. Crownover had actual and constructive notice of the dangerous situation on several occasions from Mrs. Howard and others. The last such notice was received by Mr. Crownover approximately one month prior to the incident. Mr. Crownover received a notice from the College Park housing inspector informing him, among other things, that the heating facilities in the property he leased were in poor condition and that the property was “unsafe for human occupancy and constitute[d a] hazard to [the] health and safety of [the] occupants.”
On the day the appellant was burned, she was alone at home. Mrs. Howard was out looking for a new place to live because the property had been declared “unsafe.” Not long after the appellant was taken to the hospital, the fire inspector told Mr. Crownover that the heaters would have to be replaced. Before that day had ended, Mr. Crownover had both heaters replaced.
The appellant received burns over 36 percent of her body, requiring her to remain in Grady Hospital from January 1984 until April 1984. Thereafter she had to wear a special garment for a year and had to go to the out-patient clinic at Grady on a weekly basis.
1. Under traditional property law, a lessor grants and a lessee acquires an estate in the land. Thus, according to the common law, the lessor generally has no obligation to keep the tenant’s estate in repair nor is he responsible for persons injured on or off the tenant’s estate. However, in states that follow the common law there has been
[d]iscontent with the appearance of unfairness in the landlord’s general immunity from tort liability, and with the artificiality and increasing complexity of the various exceptions to this seemingly archaic rule of nonliability, [finally] the New Hampshire Supreme Court in Sargent v. Ross [113 N.H. 388 (308 A2d 528) (1973)] turned the rule on its head in 1973 and imposed on the lessor a general tort duty of reasonable care. The holding has been followed by [ten courts], and rejected by [two courts], and it is still too early to know how broadly this restructuring of landlord tort law may extend.
W. L. Prosser & W. P. Keeton, Prosser & Keeton on Torts, p. 446 (5th ed. 1984).
Georgia’s statutory landlord and tenant law is unique. More than 120 years ago our General Assembly rejected the common law when it enacted Section 2261 of the 1865 Code which provided:
When the owner of lands grants to another simply the right to possess and enjoy the use of such lands … and the tenant accepts the grant, the relation of landlord and tenant exists between them. In such case no estate passes out of the landlord, and the tenant has only a usufruct …
Ga. L. 1865, § 2261 (now OCGA § 44-7-1 (a)).
The Georgia landlord does not grant, nor does the Georgia tenant acquire an estate. “[In a landlord and tenant relationship] the tenant has no estate, but a mere right of use, very similar to the right of a hirer of personalty.” Ga. L. 1865, § 2256 (now OCGA § 44-6-101). Thus it was only natural for the General Assembly to require the landlord, the owner of the estate, to keep his estate in repair and retain liability for all substantial improvements upon his estate. “The landlord must keep the premises in repair, and is liable for all substantial improvements placed upon them by his consent.” Ga. L. 1865, § 2266 (now OCGA § 44-7-13).
With this understanding of the Georgia landlord’s relationship to the property and to the tenant, it was no surprise when the General Assembly in 1895 enacted another statute that imposed a duty of reasonable care on landlords. “[The landlord] is responsible to others for damages arising from defective construction, or for damages from failure to keep the premises in repair.” Ga. L. 1895, § 3118 (now OCGA § 44-7-14).
Although our courts have looked to the common law in deciding landlord and tenant cases, it is clear that the General Assembly rejected the common law long ago, “and the judiciary, up until now, has simply failed to give effect to this policy in its decisions.” Country Club Apts. v. Scott, 246 Ga. 443, 444 (271 SE2d 841) (1980).
2. The General Assembly has consistently expressed the public policy of this state as one in favor of imposing upon the landlord liability for damages to others from defective construction and failure to keep his premises in repair. The expressed public policy in favor of landlord liability is matched by an equally strong and important public policy in favor of preventing unsafe residential housing.
The General Assembly has found that people with low incomes are forced to live in unsafe housing and that such living conditions constitute a menace to the health and safety of all the residents of Georgia. The General Assembly has also found a direct correlation between unsafe residential housing and excessive financial burdens placed on municipalities, counties, and the state as a whole.1
3. With these important policies expressed and firmly in place, the General Assembly enacted a statute in 1976, OCGA § 44-7-2, which forbids landlords from avoiding: their duty of repair, OCGA § 44-7-2 (b) (1); and their liability for failure to repair, OCGA § 44-7-2 (b) (2). It also forbids landlords from avoiding their duties created by housing codes, OCGA § 44-7-2 (b) (3).
The public policy of this state supports the position advanced by the Restatement of Law 2d, Property, § 17.6, which follows:
A landlord [should be] subject to liability for physical harm caused to the tenant and others upon the leased property with the consent of the tenant or his subtenants by a dangerous condition existing before or arising after the tenant has taken possession, if he has failed to exercise reasonable care to repair the condition and the existence of the condition is in violation of:
(1) an implied warranty of habitability; or
(2) a duty created by statute or administrative regulation.
The General Assembly’s mandate is clear. The landlord, the owner of the estate, cannot avoid duties created by housing codes. One of the ways in which the public policy of this state can be upheld is by subjecting the landlord to tort liability for a violation of the duties created by the housing codes and other legislation. Accord Restatement of Law 2d, Property, § 17.6 Reporter’s note 3.
Disposition of This Case
4. Prior to the time of the incident, the City of College Park adopted “The Southern Housing Code.” Thus a jury must decide whether the appellees have failed to exercise reasonable care to repair the heater and whether the condition of the heater constituted a violation of the housing code.
5. The Court of Appeals found that the appellant had assumed the risk. However,
[i]ssues of negligence, including the related issues of assumption of the risk, lack of ordinary care for one’s own safety, lack of ordinary care in avoiding the consequences of another’s negligence and comparative negligence, are ordinarily not susceptible of summary adjudication whether for or against the plaintiff or the defendant, but must be resolved by a trial in the ordinary manner.
Wakefield v. A. R. Winter Co., 121 Ga. App. 259 (174 SE2d 178) (1970).
6. The Court of Appeals held that the use of the bedroom heater was not one of “necessity” as the heater in the living room provided “a less dangerous” alternative. Thompson v. Crownover, supra, 186 Ga. App. 633, 636. However, the evidence regarding the condition of the living room heater was conflicting.2 It is the jury’s function to draw an inference from the evidence when more than one inference can be drawn. Also, the appellees cannot be insulated from liability simply because one portion of the premises might be “less dangerous” than the other. At any rate, it is a question for a jury to resolve.
7. A trial court’s grant of summary judgment will not be sustained if there is any genuine issue of material fact. There remain genuine issues of material fact for a jury’s resolution.
Judgment reversed. All the Justices concur, except Hunt, J., who concurs specially, and Marshall, C. J., Clarke, P. J., and Weltner, J., who dissent.
Hunt, Justice, concurring specially.
I write separately because the majority’s emphasis on the landlord’s conduct and the extent of the tenant’s injuries tends to obscure the central issue. The central issue is not the extent of the landlord’s negligence, which negligence is presupposed in a consideration of assumption of the risk as applied to Mrs. Thompson. Rather, the central issue is whether her admitted knowledge of the heater’s condition acts, under the doctrine of assumption of the risk, as a bar to any recovery. But for the “rule of necessity”3 I think it would.
Having said that, let me point out that certiorari was granted in this case to consider whether the “patent defect” rule bars recovery to the plaintiff in this case. Having implicitly decided that it does not, we should not then move into the fact-finding arena to determine whether the “rule of necessity” applies here – that is, whether, as a matter of fact, the plaintiff had a reasonable alternative to using the hazardous heater. In so doing, we are second-guessing both the trial court’s and the Court of Appeals’ determinations on that question.4 This is not our function on certiorari and I would not reach this issue.
- “It is found and declared that there exist in municipalities and counties of this state slum areas … [which] consume an excessive proportion of its revenues because of the extra services required for police, fire, accident, hospitalization, and other forms of public protection, services, and facilities.” OCGA § 36-61-3 (a).
[T]here exist in the state insanitary [sic] and unsafe dwelling accommodations; that persons of low income are forced to reside in such accommodations … [which] constitute a menace to the health, safety, morals, and welfare of the residents of the state and … these conditions necessitate excessive and disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection, and other public services and facilities …
OCGA § 8-3-2.
- Mrs. Howard’s affidavit stated that the Gas Light Company inspector left a note stating that the “gas space heaters” were dangerous. When the property was declared “unfit,” the notice of the housing violations stated that the “heating facilities” were in poor condition. Appellee James Crownover stated in a deposition that he replaced both heaters in the apartment after the fire inspector told him that the heaters had to be replaced.
- Explored by Judge Benham in his dissent joined by Judges Deen, McMurray and Pope.
- And, in so doing, we come no closer to reconciling the issue than did the Court of Appeals. What then does our involvement contribute to the general body of state law? See Supreme Court Rules 29 and 30 (1) regarding the criteria for the grant of certiorari.
- Which, if any, of the below are critical to making a warranty of habitability claim after Javins?
(a) showing that one’s residential lease is written in the form of a contract rather than a transfer of real property
(b) showing a violation of the local Housing Code
(c) showing bad faith on the part of the landlord
(d) showing a substantial interference with the right of possession
- In your own words, why should it affect a landlord’s duty to mitigate damages when a tenant breaks a lease whether a lease agreement is a transfer of an interest in land?
- Explain how it might be possible to show a breach of the warranty of habitability where there is no breach of the covenant of quiet enjoyment.
- True or false: One can maintain a constructive eviction claim while occupying the leased property.
1. Which, if any, of the below are critical to making a warranty of habitability claim after Javins?
(a) showing that one’s residential lease is written in the form of a contract rather than a transfer of real property
No, this is not necessary. One of the major points of Javins is that residential leases are not transfers of real property, but are to be treated like ordinary contracts. One need not show that one’s lease is a contract.
(b) showing a violation of the local Housing Code
Yes. Though some courts find violations based on conditions that fall below judicially specified community standards, the Javins court found the warranty to be based on compliance with the housing code.
(c) showing bad faith on the part of the landlord
No, not required.
(d) showing a substantial interference with the right of possession
No, this is, roughly, the standard for showing a constructive eviction, i.e., a breach of the covenant to provide quiet enjoyment, not for showing a breach of the warranty of habitability.
2. In your own words, why should it affect a landlord’s duty to mitigate damages when a tenant breaks a lease whether a lease agreement is a transfer of an interest in land?
If the lease is a transfer of an interest in land, then a landlord could neither enter a tenant’s apartment nor re-let it. The property would not ‘belong’ to the landlord, or at least is not his to possess, until the end of the leasehold at which point the property would revert to him. If, however, the lease is a contract, then the tenant’s non-payment is a material breach, which excuses the landlord from his obligation to provide the tenant with possession of the premises. Thus, if it is a contract, the landlord can cover some of his losses, but if it is a conveyance of real property, he cannot.
3. Explain how it might be possible to show a breach of the warranty of habitability where there is no breach of the covenant of quiet enjoyment.
A breach of the covenant of quiet enjoyment requires constructive eviction from at least a portion of the leased property. A breach of the warranty of habitability, like a broken window or pest infestation, can exist without constituting an eviction. That said, these claims are often brought together. And the Restatement and traditional standards for (more than insignificant, substantial) constructive eviction are less then perfectly clear. But if you observed that the standards were not the same, and observed that a landlord could violate one without violating the other, that’s fine.
4. True or false: One can maintain a constructive eviction claim while occupying the leased property.
True. This is just Minjak.