84 Hawai'i 447, Aickin v. Ocean View Investments Co., Inc.
| Decision Date | 11 March 1997 |
| Docket Number | No. 18163,18163 |
| Court | Hawaii Supreme Court |
| Parties | 84 Hawai'i 447 John R. AICKIN, George C. Meyer, Sr., Colleen R. Meyer, and A & M Corporation, a Hawai'i corporation, Plaintiffs-Appellants, v. OCEAN VIEW INVESTMENTS COMPANY, INC., a Hawai'i corporation, Defendant-Appellee, and John R. AICKIN, George C. Meyer, Sr., Colleen R. Meyer, and A & M Corporation, a Hawai'i corporation, Third Party Plaintiffs, v. John DOES 1-10, Third Party Defendants. |
Stephen D. Whittaker and David W. Lacy of Case & Lynch, on the briefs, Kailua-Kona, for Defendant-Appellee.
Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ. RAMIL, Justice.
Plaintiffs-Appellants John R. Aickin, George C. Meyer, Sr., Colleen R. Meyer, and A & M Corporation (collectively Lessees) appeal from (1) the order denying their motion for summary judgment and (2) the findings of fact (FOFs), conclusions of law (COLs), and final judgment entered in the Third Circuit Court. On appeal, Lessees contend the trial court erred when it: (1) denied Lessees' motion for summary judgment; 1 (2) admitted certain items into evidence; 2 (3) entered certain FOFs and COLs; (4) entered its final judgment, in which the court terminated the commercial lease, failed to require Defendant-Appellee Lessor to compensate Lessees for the "windfall" received by Lessor, and awarded attorney's fees and costs to Lessor; and (5) ruled that the lease would not continue for the five-year period commencing April 1, 1993. Lessees, however, devote the bulk of their brief to addressing the principle of equity and the importance of its application in the present case. In other words, Lessees argue that had the trial court properly applied equitable principles, it would not have erred as alleged, supra. Because we believe that equity should intervene in this case, and because we hold that Lessees were not in material default of the lease, we partially reverse those portions of the final judgment and the order granting fees and costs to Lessor.
In the 1970s, Lessor (hereinafter sometimes referred to as OVI) purchased forty-eight acres of undeveloped land in the Hawaiian Ocean View Rancho Subdivision, located on the island of Hawai'i. Lessor paid $14,000 for lot 4, which consisted of three acres.
Prior to 1983, Lessor had obtained a special use permit from the County of Hawai'i to allow development of its acreage in return for a commitment to provide a gasoline service station in this remote area. After unsuccessful negotiations with other individuals, Lessor received from Lessees an offer, dated January 7, 1983, to lease one acre of lot 4 (hereinafter "the premises") and to construct "an automobile fuel service and maintenance station and a building for retail sales." Thereafter, on March 1, 1983, Lessees and Lessor agreed that the lease term was to be ten years, commencing on April 1, 1983, and terminating at midnight on March 31, 1993. Lessees were required to expend $50,000 on improvements to the premises. 3 The lease Almost four months later, by letter dated January 26, 1993, Lessor notified Lessees that, pursuant to the lease agreement, 5 they were to "surrender the premises in a clean and orderly condition to the Lessor's satisfaction." In the same letter, Lessor inquired whether Lessees had registered underground storage tanks as required by law. Lessees' attorney, Daniel Lee, sought to extend the lease on February 3, 1993. 6 Nevertheless, on February 5, 1993, Lessor declined to do so, claiming that the option had expired and that Lessor was prepared to take over the premises on April 1, 1993. 7 On March 3, 1993, Lessees filed a complaint in the Third Circuit Court against Lessor, alleging, inter alia, that: (1) Lessor would be unjustly enriched at the expense of Lessees' permanent improvements on the land and the income revenue being generated by these improvements; (2) Lessor's enrichment would result from its knowingly permitting Lessees innocently to violate the requisite time period for giving written notice to extend the lease; and (3) Lessor's intentions to benefit from Lessees' mistake had already been made known to Lessees' sublessees. Based on these allegations, Lessees prayed for the following relief:
[84 Hawai'i 450] also provided that Lessees, only if "not then in material default," had the option of extending the term of the lease for eight additional five-year terms by giving Lessor notice, in writing, not less than six months prior to the end of the first term, and not less than six months prior to the end of each succeeding extended five-year term. 4 Although Lessees were required to notify Lessor in writing of their intention to extend the lease on or before September 30, 1992, they failed to do so.
1. [A declaration] [t]hat [Lessor] by its conduct is not entitled to terminate the Lease due to [Lessee]s' substantial mistake in providing notice.
2. [That] [u]pon a prompt hearing, [Lessor] be restrained and enjoined from terminating the Lease, taking any action against [Lessees] or its subtenants, from making any and all claims with respect to terminating the Lease and assuming the position of landlord over tenants in the building as set forth in the proposed form of Preliminary Injunction attached hereto as Exhibit C 3. That the Court determine that said Lease is in effect or in the alternative that [Lessor] should reimburse [Lessees] for the cost of all improvements made on said property. 8
On December 27, 1993, Lessees filed a motion for summary judgment requesting that the lease remain in effect for the five-year period commencing April 1, 1993. The circuit court denied Lessees' motion on January 11, 1994.
At the conclusion of a bench trial, the circuit court entered the following pertinent FOFs, COLs, and order: 9
14. The lease agreement provided, in § 15, that the "Lessee will not without the written consent of Lessor, except as herein expressly provided, assign or mortgage this Lease nor sublet or part with possession of the whole or any part of the demised premises."
15. Lessees were in breach of the lease agreement on September 30, 1992 and March 31, 1993 because they failed to seek written consent from [OVI] for any of a number of subleases of the premises.
* * *
17. Lessees were in breach of the lease agreement on September 30, 1992 and March 31, 1993 because they were consistently late with their minimum rent and percentage rent payments.
* * *
19. Lessees were in breach of the lease agreement on September 30, 1992 and March 31, 1993 because they failed to timely notify, in violation of HRS § 342L-30, the State of [Hawai'i] Department of Health of the existence of an underground storage tank on the premises.
20. The lease agreement provided, in § 13, that the "Lessee will not commit or suffer any act or neglect whereby said premises or any improvement thereon or the estate of Lessee therein shall at any time during said term become subject to any attachment, judgment, lien, charge or encumbrance whatsoever."
21. Lessees were in breach of the lease agreement on September 30, 1992 and March 31, 1993 because they allowed liens to attach to the premises.
* * *
34. The proceeds from [a $150,000 loan] went in part to pay the Lessees back all of the money they had invested in the premises through June, 1984. Approximately $20,00 of the loan proceeds is [sic] unaccounted for.
* * *
38. A & M CORPORATION received economic benefits in an amount not less than $132,555 from the inception of the lease agreement through 1992 as follows:
(1) Operating loss carry forward of over $56,192.
(2) Stockholder loans of over $11,593.
(3) Receipt of excess proceeds from loans to A & M in excess of $20,344.
(4) Available tax write-off in excess of $44,426 of remaining capital improvements not fully depreciated.
39. The Lessees' investment in the premises is fully leveraged[;] thus they have no money of their own invested in the capital improvements of A & M CORPORATION.
* * *
41. Tax benefits are available to the Lessees because of the net operating losses that A & M CORPORATION has carried forward over the term of the lease agreement.
* * *
CONCLUSIONS OF LAW
* * *
B. Plaintiffs failed to timely exercise their option to extend the lease agreement[;] thus the lease agreement entered into by and between the Lessees and [OVI] terminated at midnight on March 31, 1993.
C. The Plaintiffs' breaches of the lease agreement, failure to pay minimum and percentage rent, failure to seek written consent from [OVI] for any subleases of the premises, failure to timely notify, in violation of HRS § 342L-30, the State of [Hawai'i] Department of Health of the existence of an underground storage tank on the premises, and failure to prevent liens from attaching to the premises, were individually and collectively material breaches of the lease agreement.
D. Even if the Plaintiffs had timely exercised their option to extend the lease agreement, they were, on September 30, 1992 and March 31, 1993, in material breach of the lease agreement[;] thus the Plaintiffs had no right to exercise their option to extend the lease agreement in any event.
E. The Plaintiffs will suffer no forfeiture if the lease agreement is enforced according to its terms. See Urban Research Studies & Development, Ltd. v. Teruya & Sons, 3 Haw.App. 5, 639 P.2d 1115 (1982).
F. The Plaintiffs are entitled to no equitable relief if the lease agreement is enforced according to its terms. Id.
* * *
G. The Plaintiffs' filing of a Complaint and Motion for Preliminary Injunction in an attempt to prevent the expiration of the lease agreement constituted an anticipatory repudiation of the lease agreement.
* * *
K. [OVI], as the prevailing party, is entitled to its reasonable costs and attorney's fees incurred herein.
To continue reading
Request your trial
-
Shanghai Inv. Co., Inc. v. Alteka Co., Ltd., No. 20709.
...disregarded rules or principles of law or practice to the substantial detriment of the appellant." Aickin v. Ocean View Investments Co., Inc., 84 Hawai`i 447, 453, 935 P.2d 992, 998 (1997) (quoting AIG Hawai`i Insurance Company, Inc., v. Bateman, 82 Hawai`i 453, 457, 923 P.2d 395, 398 (1996......
-
Andrews v. Blake
...See Monihon (twenty-three-day delay in exercising option to renew lease did not preclude equitable relief); Aickin v. Ocean View Invs. Co., 84 Hawai'i 447, 935 P.2d 992, 998 (1997) (equitable relief granted despite four-month delay in giving notice); Ward v. Washington Distribs., Inc., 67 O......
-
Beneficial Hawaii, Inc. v. Kida
...a mistake has been committed." State v. Kane, 87 Hawai`i 71, 74, 951 P.2d 934, 937 (1998) (quoting Aickin v. Ocean View Investments Co., 84 Hawai`i 447, 453, 935 P.2d 992, 998 (1997) (quoting Dan v. State, 76 Hawai`i 423, 428, 879 P.2d 528, 533 (1994))). [A finding of fact] is also clearly ......
-
DAIICHI HAWAI'I REAL ESTATE v. Lichter
...a mistake has been committed." State v. Kane, 87 Hawai'i 71, 74, 951 P.2d 934, 937 (1998) (quoting Aickin v. Ocean View Investments Co., 84 Hawai'i 447, 453, 935 P.2d 992, 998 (1997) (quoting Dan v. State, 76 Hawai'i 423, 428, 879 P.2d 528, 533 (1994))). [A finding of fact] is also clearly ......
-
Estoppel in Property Law
...acceptance of notice as an effective exercise is estopped from objecting to exercise). 122. See, e.g., Aickin v. Ocean View Invs. Co., 935 P.2d 992 (Haw. 1997); J.N.A. Realty v. Cross Bay Chelsea, Inc., 366 N.E.2d 1313, 1316 (N.Y. 1977)(permitting tenant to renew lease even though tenant, a......