AB Realty One, LLC v. Miken Techs., Inc.

• Decision Date: 31 July 2015
• Docket Number: No. ED 101457,ED 101457
• Citation: 466 S.W.3d 722
• Parties: AB Realty One, LLC, Plaintiff/Respondent, v. Miken Technologies, Inc., Defendant/Appellant.
• Court: Missouri Court of Appeals

466 S.W.3d 722

AB Realty One, LLC, Plaintiff/Respondent

v.Miken Technologies, Inc., Defendant/Appellant.

No. ED 101457

Missouri Court of Appeals, Eastern District, DIVISION ONE .

Filed: July 31, 2015

Joseph V. Neill, 5201 Hampton Ave., St. Louis, Missouri 63109, for Appellant.

Jerry S. Jacko, 134 Gay Ave., Clayton, Missouri 63105, for Respondent.

INTRODUCTION

Lisa S. Van Amburg, Chief Judge

Miken Technologies, Inc. (“Miken”) appeals the judgment of the trial court in favor of AB Realty One, LLC (“AB Realty”) on AB Realty's petition for breach of a lease agreement. Miken argues the trial court misapplied the law in determining that it breached the lease for the 2011 and 2012 terms by failing to pay common area utilities and other maintenance expenses. Miken also argues there is no substantial evidence to support the court's factual findings and award of damages. We affirm in part, reverse in part, and remand for further findings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

The dispute in this case involves Miken's purported obligation to pay common area utilities and maintenance expenses in a warehouse facility in which it leased space in 2011 and 2012. On December 19, 2008, Miken executed a commercial lease for a tenancy running the whole of 2009 (the “2009 Lease”). During the 2009 Lease period, AB Realty purchased the facility housing the premises leased by Miken, and assumed the landlord's obligations and rights under the 2009 Lease.

Pursuant to the 2009 Lease, Miken agreed to lease 3,185 square feet of warehouse office space in a facility with a total leasable area of 18,000 square feet. Miken agreed to pay “Base Rent” for the year, in monthly installments of $1,857.02. Miken also agreed to pay “Services and Utilities” defined as “all water, gas, heat, light, power, telephone, sewer, and other utilities and services” used on the premises it leased within the warehouse facility.

In addition to the above rent and utilities, Miken agreed to pay a fee denominated “Additional Rent” that would be “calculated and billed quarterly for Common Area Maintenance Operating Expenses” (“CAM”). The 2009 Lease defined CAM as “all expenses, actual or accrued, in connection with the ownership, management and operation of the [warehouse office].” It categorized these expenses as follows:

1. Cost of all maintenance and service agreements on equipment, including without limitations fire protection systems maintenance, exterminators, snow removal, [and] rubbish removal.

2. Insurance premiums.

3. Cost of repairs and general maintenance of the [warehouse office], including, without limitation, its common areas, landscaping, parking lots and the grounds surrounding the [warehouse office], but exclusive also of expenditures made for capital investments, and Leasing commissions.

4. Cost of all utilities, including water, sewer and energy for lighting of the Common areas of the Buildings.

The provision defining CAM further stated: “[t]he obligation of [Miken] with respect to the payment of Additional Rent [CAM] shall survive the termination of this Lease.”

Miken's share of CAM payments in the 2009 Lease was based on its proportionate share of the facility's total leasable area, which was calculated to be 17.69%. In other words, because Miken leased 17.69% of the total leasable area within the warehouse facility, or 3,185 square feet of the warehouse's 18,000 square feet, Miken was obligated to pay 17.69% of the total CAM. The lease provided that any future increase in Miken's proportionate share of CAM must also be based upon Miken's proportionate share of the facility's total leasable area, “determined in accordance with the American Standard of Floor Measurement of the Buildings Owners' and Managers' Association (BOMA).”

The 2009 Lease also included an attorney's fees provision that stated, in relevant part: “the non-prevailing party shall [bear] the sole cost of all reasonable legal fees.” There was also a provision entitling AB Realty to a “Late Payment Charge.... at the rate of (5%) per month for Rent not paid when due.” It also contained a “No Waiver” provision stating: “[t]he fact that [AB Realty] does not exercise its rights hereunder in the event of breach ... by Tenant shall not be deemed a waiver of such rights as to subsequent breaches.”

After the 2009 Lease expired, Miken continued its tenancy pursuant to the terms of a one-page lease addendum, for a period running until December 31, 2010 (the “2010 Addendum”). The 2010 Addendum reduced Miken's rental obligation to $1,300 per month. It also provided Miken “will not pay for CAMM [sic] during this lease but will continue to pay for utilities.” Aside from these changes, the 2010 Addendum stated it would “become a part of the original [2009] [L]ease dated December 19, 2008....”

In 2011, after the 2010 Addendum expired, the parties did not enter into any written arrangements for the lease of space within the warehouse facility. Miken, however, continued to occupy space within the facility throughout 2011, and paid the same amount of rent to AB Realty as that agreed to in the 2010 Addendum.

In February 2012, the parties executed a second addendum (the “2012 Addendum”) which would “become a part of the original lease dated December 19, 2008.” The 2012 Addendum “extended” the lease term “on a month to month basis ...” at the same rate of rent established in the 2010 Addendum, however it did not include any language addressing CAM or utilities. Instead, the 2012 Addendum added a notice requirement for “early termination” of the lease, and stated, “[a]ll other terms and conditions of lease shall remain in effect.”

At the end of 2012, Miken terminated its tenancy with AB Realty and vacated the premises. Two months later, in February 2013, Gus Botonis, the principal shareholder of AB Realty, sent a letter to Miken demanding payment of $5,795.15 for Miken's “pro-rata share” of CAM for the year 2011.¹ A week later, Botonis sent a second letter demanding Miken pay $3,826.62 for Miken's share of CAM “for the period January to November 15, 2012.”² Both letters purported to calculate Miken's pro-rata share of CAM at 30.49% of the facility's total CAM. When Miken refused to pay, AB Realty filed the instant action.

In its petition, AB Realty claimed, inter alia, that Miken breached the lease in 2011 and 2012 by refusing to pay its proportionate share of CAM “as allocated under said lease and its addendums thereto.” AB Realty requested the trial court award it damages, a late payment charge calculated at 5% of the damage award, and attorney's fees. Miken filed an answer denying AB Realty's claims, and the court conducted an evidentiary trial on the matter.

During trial, AB Realty submitted into evidence the 2009 Lease, the 2010 and 2012 lease addenda, an attorney's invoice³ , and bills documenting total CAM expenses for the facility during the relevant time periods. Botonis also testified in support of AB Realty's claims.

Botonis confirmed that after the 2009 Lease expired, the parties agreed to extend Miken's tenancy another year under the 2010 Addendum. Botonis testified the 2010 Addendum was prepared by his secretary, and the parties intended its terms to relieve Miken of the obligation to pay CAM. He further testified as follows:

[GUS BOTONIS]: We—We just went this [sic] agreement here which just to kind of help him out that one time but that, if I recall, it didn't include utilities.

[PLAINTIFF'S COUNSEL]: Okay. And it says here that they were going to still pay for utilities?

[GUS BOTONIS]: Yes.

[PLAINTIFF'S COUNSEL]: Is that correct?

[GUS BOTONIS]: Correct. He would use them.

Next, Botonis confirmed that in 2011, the parties did not enter into a written agreement or addendum for the leased premises, and AB Realty continued to accept rent from Miken. He could not recall the very first time that he billed Miken for 2011 CAM, but confirmed that AB Realty did not bill Miken quarterly or semi-annually in 2011. Botonis confirmed that in 2012, Miken and AB Realty executed the 2012 Addendum, which was also prepared by his secretary. He could not recall whether there was any discussion concerning CAM payments for 2012.

On cross-examination, Botonis testified regarding AB Realty's square footage calculations for 2011 and 2012. He confirmed the demand letters requested CAM payments “based upon 30.49 percent” of the total leasable area. Botonis then testified as follows:

[DEFENSE COUNSEL]: Now, how much space was Miken ... leasing at that time?

[GUS BOTONIS]: I honestly can't remember all the square footage of all the tenants.

THE COURT: I can't hear you, sir.

[GUS BOTONIS]: I honestly can't remember all the square footage of all the tenants I had. I've got over 300 tenants. I just—I can't remember everybody's.

[DEFENSE COUNSEL]: Well, I understand that, but you're making a claim based upon him having 30.49 percent of 18,000 square feet.

[GUS BOTONIS]: Okay.

[DEFENSE COUNSEL]: All right. Did he occupy that much? Did he occupy 5,400 square feet?

[GUS BOTONIS]: That might—He may have. I think it's all in the ballpark. I mean, I know he had one—one space alone that he had was 2, 500 square feet and then he had another one that's over 2,000, so that's probably about the ballpark.

At the close of AB Realty's case in chief, Miken called its Chief Executive Officer, Michael Smith, to testify in its defense. Smith testified that after the 2009 Lease expired, Miken negotiated a new lease rate with AB Realty that included no CAM fees, as reflected in the 2010 Addendum. Although the 2010 Addendum provided that Miken agreed to pay “utilities,” Smith testified the parties intended this to mean only that Miken would pay the utilities it used on the space leased; not the utilities within the definition of CAM. He testified Miken would not have continued its lease in 2010 if the parties intended Miken to pay any CAM.

Smith testified that the parties did not enter into a written agreement for 2011.

Instead, in December 2010, there...