56 Leinbach Investors, LLC v. Magnolia Paradigm, Inc.
| Decision Date | 10 September 2014 |
| Docket Number | No. 5270.,5270. |
| Citation | 769 S.E.2d 242,411 S.C. 466 |
| Court | South Carolina Court of Appeals |
| Parties | 56 LEINBACH INVESTORS, LLC, Appellant/Respondent, v. MAGNOLIA PARADIGM, INC, Respondent/Appellant. Appellate Case No. 2012–213389. |
Donald H. Howe, of the Law Office of Donald H. Howe, LLC, of Charleston, for Appellant/Respondent.
William S. Barr, of Barr, Unger & McIntosh, LLC, of Charleston, for Respondent/Appellant.
In this cross-appeal, 56 Leinbach Investors, LLC (Leinbach) appeals the master-in-equity's determination it breached a lease agreement with Magnolia Paradigm, Inc. (Magnolia) when Leinbach leased a portion of the subject property to a third party. Leinbach further appeals the master's award of a $300 per month rent abatement as damages, arguing Magnolia suffered only nominal damages. Magnolia appeals the master's admission of parol evidence regarding the scope of the subject property and the damages award, contending the master erred in reforming the lease and that rent abatement should be equivalent to the amount Leinbach is receiving under the third-party lease. We affirm in part, reverse in part, and remand.
Leinbach and Magnolia entered into a lease agreement in 2003 whereby Magnolia leased from Leinbach a 1.21–acre undeveloped parcel of land for Baker Motors to use as employee parking. The parcel is located in Charleston County and adjoined another parcel owned by Leinbach and occupied by the Charleston Montessori School. Prior to signing the lease, the parties negotiated the terms including Magnolia submitting a planned design for construction of the parking area, which covered most of the 1.21 acres with the exception of a small wooded area. Leinbach sought $2,000 per month in rent, and after negotiations, the parties agreed upon $1,800 per month.1
In 2005, Optima Towers (Optima) approached Leinbach's sole member, Clyde Hiers, about leasing space to erect a communications tower on the property. Baker Motors was aware of the tower's erection because Optima coordinated with it regarding construction equipment at the site and the tower is immediately adjacent to the employee parking lot.
In late 2006, Magnolia decided to buy the leased property and discovered the tower had been erected within the wooded area of the 1.21 acres. In late 2007, Magnolia notified Leinbach it considered the erection of the tower to be a violation of the lease and began deducting $886.97, the amount Leinbach was receiving from Optima, from its monthly lease payments. Leinbach filed suit against Magnolia, alleging Magnolia breached the lease by failing to pay the full amount of rent due under the lease. Magnolia asserted the defense of abatement under the lease and counterclaimed for the $886.97 Optima was paying Leinbach under the tower lease. Both parties also asserted unjust enrichment claims. Neither party sought to terminate the lease.
The case was referred to the master, and a trial was conducted. The master concluded the leased property constituted the entire 1.21 acres and Leinbach breached the lease by permitting the erection of the tower. However, it further concluded Magnolia had abandoned the wooded area and also breached the lease by withholding the $886.97 in payments each month. The master further determined the parties made a mutual mistake that allowed for reformation of the lease because neither Leinbach nor Magnolia understood the wooded area was covered by the lease agreement. The master then reformed the lease to reflect Magnolia's inability to use the wooded area. He determined Magnolia could not use one sixth of the leased property and reduced Magnolia's the monthly rent by that amount, $300 per month. These cross-appeals followed.
“When legal and equitable actions are maintained in one suit, each retains its own identity as legal or equitable for purposes of the applicable standard of review on appeal.” Corley v. Ott, 326 S.C. 89, 92 n. 1, 485 S.E.2d 97, 99 n. 1 (1997). The reviewing court should “view the actions separately for the purpose of determining the appropriate standard of review.” Jordan v. Holt, 362 S.C. 201, 205, 608 S.E.2d 129, 131 (2005).
“An action for breach of contract seeking money damages is an action at law.” Ellie, Inc. v. Miccichi, 358 S.C. 78, 89, 594 S.E.2d 485, 491 (Ct.App.2004) (internal quotation marks omitted). On appeal of an action at law, this court will affirm the master's factual findings if there is any evidence in the record which reasonably supports them. Query v. Burgess, 371 S.C. 407, 410, 639 S.E.2d 455, 456 (Ct.App.2006).
“Actions involving reformation of instruments are equitable in nature.” Crewe v. Blackmon, 289 S.C. 229, 233, 345 S.E.2d 754, 756 (Ct.App.1986). In an action in equity, tried by the master, the appellate court has jurisdiction to find facts in accordance with its views of the preponderance of the evidence. Fox v. Moultrie, 379 S.C. 609, 613, 666 S.E.2d 915, 917 (2008).
Leinbach contends the master erred in finding it breached the lease agreement because “demised premises” included the entire 1.21 acres of property described in the lease. We disagree.
“When [a] contract's language is unambiguous it must be given its plain and ordinary meaning and the court may not look to extrinsic evidence to interpret its provisions.” Stevens Aviation, Inc. v. DynCorp Int'l, LLC, 394 S.C. 300, 307, 715 S.E.2d 655, 659 (Ct.App.2011), rev'd on other grounds, 407 S.C. 407, 756 S.E.2d 148 (2014). “[E]xtrinsic evidence may only be considered if the contract is ambiguous.” Preserv. Capital Consultants, LLC v. First Am. Title Ins. Co., 406 S.C. 309, 320, 751 S.E.2d 256, 261 (2013).
Article I, Section 1.01 of the lease, entitled “Demised Premises,” indicates “Landlord hereby demises and leases to Tenant, and Tenant hereby takes and leases from Landlord, certain premises (herein called the “Demised Premises”) consisting of the real estate and any improvements located or to be located thereon described 1.21 acres of real estate located at Leinbach Dr.[,] City of Charleston, State of South Carolina and more particularly described as parcel H–2 of TMS# 349–01–00–045....”
Although other sections of the lease discuss the permissible use of the demised premises, the contract unambiguously indicates the entire 1.21 acres constitutes the demised premises.2 Article XII entitled “Title to Premises” states, “the Demised Premises shall hereafter be subject to no leases, easements, covenant, restriction or the like which in any manner would prevent or interfere with Tenant.” Additionally, Tenant is “ entitled to lawful, quiet and peaceful possession and occupation of the Demised Premises and shall enjoy all the rights, herein granted without any let, hindrance, ejection, molestation or interference by any person.”
The tower's presence within the demised premises deprives Magnolia of full, quiet, peaceful possession, and the Optima lease interferes with Magnolia's use of the property in some manner, although not to the extent Magnolia argues. Consequently, we affirm the master's ruling that Leinbach breached the lease.
Magnolia contends the master erred in reforming the lease based on mutual mistake. We agree.
“A contract may be reformed on the ground of mistake when the mistake is mutual and consists in the omission or insertion of some material element affecting the subject matter or the terms and stipulations of the contract, inconsistent with those of the parol agreement which necessarily preceded it.” George v. Empire Fire & Marine Ins., Co., 344 S.C. 582, 590, 545 S.E.2d 500, 504 (2001). ” Id. (emphasis added); see also 66 Am.Jur.2d Reformation of Instruments § 1 (2011) ().
The master concluded:
While I find [Leinbach] breached its lease with [Magnolia], I further find that [Magnolia's] failure to utilize the area in question amounted to an abandonment of that part of the demised premises which resulted in a mutual mistake of fact—both parties were unaware that the “wooded area” was contained within the demised premises at the time that either lease was entered into. I further find that this abandonment occurred prior to [Leinbach]'s breach of the express terms of the lease by again renting part of the demised premises.”
Initially, we note that neither party, at trial or on appeal, contends they made a mutual mistake. Furthermore, we find the preponderance of evidence in the record does not support a finding of mutual mistake at the time the contract was formed with respect to whether the wooded area was included in the 1.21 acres constituting the demised premises.
William Cochran, Jr. was operations manager for Baker Motors from 1993 until 2004 and negotiated the lease with Leinbach. He indicated the lease included the wooded area for a total of 1.21 acres even though it was not feasible to develop the area for parking at that time and testified as follows:
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