Jury favors landlord in commercial lease dispute

A Buchanan County jury awarded $97,000 in damages to a landlord accusing a tenant of breaching a commercial real estate lease.

Colonial 353 Redevelopment Corp. redeveloped a bakery building at 2300 Frederick St. in St. Joseph. Mary R. Scott, a certified public accountant, leased space in the building to start a CPA practice. The parties agreed to a five-year lease beginning in August 2001.

Colonial claimed that Scott had trouble paying rent and moved out after three years. Scott contended her employees would have been alone in a building in an unsafe neighborhood because the other tenant was moving out. Colonial, however, had no duty to provide security and there had been no safety incidents.

Colonial filed suit after the lease expired in 2006. Scott agreed to settle just before trial, but then refused to sign the settlement agreement, as was necessary under the statute of frauds. Scott alleged her attorney had not informed her of the settlement details, which had been reached while Scott was not at the conference table.

“The settlement agreement presented by the plaintiff’s attorney did not resemble anything other than the dollar amount my attorney told me,” said Scott. “The plaintiff said in his deposition that he thought I wouldn’t sign the agreement prepared by my attorney.”

According to Scott, the agreement was prepared by Colonial’s attorney and sent back several times because he would not change it to reflect the actual agreement. “I would have signed it if I had ever seen anything close to what I agreed to outside of the courtroom on the day the trial was to begin,” Scott said.

The trial court refused to place the case back on the trial docket and dismissed it without prejudice. Colonial re-filed the case.

Scott asserted counterclaims and affirmative defenses for fraud, breach of lease and constructive eviction. She alleged fraud based on promises from the realtor about improvements that were supposed to be made pursuant to a redevelopment contract with the city of St. Joseph, but were never made. She claimed breach of lease based on a roof leak that was fixed more than two years before Scott moved out.

To support the constructive eviction claim, Scott cited a failure to clear the parking lot within hours after a snow storm ended, resulting in three separate falling incidents without injury. She also claimed a continuing mold problem in the building, sewer gas smells and the landlord’s refusal to do maintenance. “My husband testified that he had to insulate the wall between my suite and an empty warehouse space so we could use one of the rooms without wearing coats and gloves,” Scott said.

Furthermore, Scott alleged that Colonial defaulted on the redevelopment contract with the City of St. Joseph. She argued the default rendered Colonial not in good standing under state law and thus unable to bring an action to collect rent. There was no allegation of a third-party beneficiary.

Colonial offered testimony from an employee of another tenant to demonstrate there were no significant issues with the building. The employee also testified that he was out of town about half of the time, Scott said.

Scott attempted to offer expert testimony that she had been constructively evicted, and that the building was not a “Class A” building due to its age. Plaintiff’s attorney C. Gregg Larson said the court largely prevented the expert from testifying because Scott had testified that she had no knowledge of her expert’s definition of “Class A” and had thus not relied on it.

The court granted summary judgment for Colonial on the fraud counterclaim and sustained Colonial’s motion for directed verdict on the constructive eviction counterclaim.

The jury returned a verdict for Colonial on its claim and the counterclaim for breach of lease. The jury awarded $48,643 for unpaid rent and $48,357 for attorney’s fees, for a net verdict of $97,000.

Scott filed a motion for new trial. The motion is scheduled for a hearing on Jan. 28.

– Anne C. Vitale

 

• $97,000 jury verdict
• Breach of commercial real estate lease
• Court:  Buchanan County Circuit Court
• Case Number/Date: 07BU-CV05133/Dec. 5, 2008
• Judge: Weldon C. Judah
• Defendants’ Experts:  David Zimmer, Kansas City (real estate practices)
• Special Damages: $48,643 unpaid rent; $48,357 attorney’s fees
• Last Pretrial Demand: None
• Last Pretrial Offer: None
• Caption: Colonial 353 Redevelopment Corp. v. Mary R. Scott and Douglas A. Scott
• Plaintiff’s Attorney: C. Gregg Larson, C. Gregg Larson PC, St. Joseph
• Defendants’ Attorney:  Daniel Radke, Daniel Radke Attorney at Law, St. Joseph